Why is Spain recording a slowdown in the sale of electric vehicles?

A slowdown of electric car sales has set alarm bells ringing in Europe. Especially as the continent set the ambitious goal of vetoing the sale of cars that are not zero emissions by 2035, which means only pure electric, hydrogen or those powered by synthetic fuels can be registered.

Faced with the slowdown, manufacturers are revising their plans and promoting non-plug-in hybrid models, which are the most successful at this stage. But at the same time they have to keep up the race to be competitive in electric vehicles against their Chinese rivals, which have invaded the market and have plans to manufacture in Europe at unbeatable prices. The industry is now asking the new European parliament for extra support.

The registration data so far in 2024 leave no doubt there has been a break in the trend. For the first time, the share of electric and plug-in hybrids is not growing and has even fallen compared to the previous year. In the EU, their weight between January and April was 12% and 7.2%, respectively, slightly below the same period in 2023. Meanwhile, non-plug-in hybrids have increased their share from 22.7% to 29%.

In Spain, which is lagging behind the average, the figures are even more worrying. As of May, the share of electric cars was only 4.5% and that of plug-in cars was 5.9%, below that of 2023. The reason for this is that their sales are growing, but slowly, compared to the skyrocketing hybrids, which already account for 36% of registrations and rising.

The reason? The dealers' association in Spain, Faconauto, pointed firstly to the high price of electric cars. "It is quite possible that those who could afford to buy one have already done so and that is why there has been a slowdown," said the association, which is calling for much stronger incentives to facilitate the changeover. They cited the example of Navarre, which allows 30% of the price to be deducted from personal income tax, double that of the common system. They also call for the Moves aid plan, which expires on 31 July and provides subsidies of up to 7,000 euros per vehicle, to be updated and sped up.

The lack of charging stations could also be contributing to less sales. The image of Tesla's queues at Easter only exacerbated a lack of confidence. Spain is lagging behind, with only 32,422 electric charging stations at the end of April, when it should reach 63,500 this year. But this is a widespread problem in most of the EU. "Almost two thirds of charging points are concentrated in three countries: the Netherlands, France and Germany," according to a report by European automotive industry body ACEA, which stepped up its call for greater political support ahead of the European elections. "Setting ambitious electrification targets without having set equally ambitious conditions for implementing them is not a smart strategy. Europe needs to do much more," said its director general, Sigrid de Vries, in a recent statement.

In the meantime, manufacturers, which have accumulated investments of 250 billion in this transition, are revising their plans. Mercedes-Benz confirmed in early May it was abandoning its goal of electrification by 2030 and that it "will continue to produce hybrid and combustion-engine vehicles well into that decade if demand exists". Likewise, the joint venture it has with Stellantis has announced a re-adjustment in the deadlines for the start-up of its battery plants in Germany. Another case is Ford, which at the end of last year suspended its electrification plans for Europe and will manufacture a hybrid version of a multi-energy car in Almussafes instead of the electric model initially planned.

On the other hand, European manufacturers are still looking for ways to lower the price of electric cars to make them affordable, aware that if they fail to do so, their Chinese competitors will eat up the market by dominating the supply of batteries. Brussels announced in September an investigation to put the brakes on them, but it is not yet known what this will mean, and it is ruled out that it will reach the levels of the United States, which will apply a 100% tariff from 1 August. In addition, Asian companies already have plans to manufacture in Europe to avoid these levies, such as Chery in the former Nissan factory. "More than tariffs, the idea is to encourage clean mobility and not to suffocate with fines like those already imposed on manufacturers for exceeding CO2 emissions in their sales," said the Spanish employers' association Anfac.

Just a few days ago Volkswagen announced its intention to bring 20,000-euro electric vehicles to market by 2027 and is working on several 25,000-euro models by 2025. But it has asked the EU to help it achieve this. "Electromobility in Europe and for Europe can only succeed with political support and competitive framework conditions," said CEO Tomas Shaefer a few days ago.

Other European brands have teamed up with Chinese manufacturers under the maxim "if you can't beat your enemy, join them". Stellantis recently announced it will market cars from its partner Leapmotor from September onwards.