The transition to electric vehicles (EVs) is proceeding rapidly; sales in Europe are accelerating thanks to the enthusiasm of early adopters and government subsidies, given the evolution of government and European initiatives on cleaner energy. According to Schmidt Automotive, sales of battery electric vehicles (BEVs) will reach a market share of 60% in Western Europe by 2030, or 8.4 million vehicles – a paradigm shift on the continent where the internal combustion engine (ICE ) was invented over 160 years ago.
More … than 50 countries in Europe have pledged to phase out fossil fuel vehicles by 2050. Among them, Norway has the most ambitious goal, to achieve a 100% electric vehicle to share sales of new passenger vehicles and light vans by 2025. But as these countries go through their rapid energy transitions, they also need to be aware of the political fallout and the economic realities of rising energy prices.
France in 2019 suffered from the violent political demonstration of “yellow vests”, and this past weekend, Kazakhstan suffered an eruption of political protests that were catalyzed by the removal of a price cap on liquefied petroleum gas (LPG). Germany’s notorious Energiewende – the national push for economy-wide decarbonization – has resulted in increased consumption of dirty coal and increased imports of energy. Record-breaking energy prices continue to plague Europe as shortages of natural gas and low production of renewable energy persist across the continent.
Tesla has the greater market share of electric vehicles in Europe. Once online, it’s the German Gigafactory that will produce “hundreds of thousands of Model Y vehicles” and “millions of battery cells,” according to Tesla’s website. The development represents another boost to European energy security and another feather in the hat of Elon Musk, who is taking global electric vehicle markets by storm.
However, forecasts for the biggest automakers indicate that Volkswagen is fixed surpass Tesla for the production of electric vehicles. The German automaker is expected to overtake Tesla in 2024. It plans to lower the cost of batteries and increase efficiency by using its own battery cell production plants in Europe. While other European companies like Stellantis and BMW should to augment the number of vehicles sold quickly, neither will compete with Tesla.
But can the European electricity grid handle the proliferation of electric vehicles that Tesla, Volkswagen, Mercedes-Benz and others promise to bring? Amid an energy crisis that has pushed EU countries to burn more coal and fuel oil to make up for the underperformance of solar and wind power, electricity and gas prices have soared. arrow. European daily electricity prices have increased to 94 euros per megawatt hour. Throughout 2021, wholesale gas prices have increased by more than 400%. Gigafactory and other EV productions, while marketed as durable and efficient, will undoubtedly require significant amounts of electricity to power manufacturing and EV operations, straining an already tight market.
That’s not all Tesla and other electric vehicle makers will have to contend with. Access to critical elements and rare earths (REEs) has become increasingly delicate, given the pressure placed on supply chains by the COVID-19 pandemic. This has affected access to several raw and finished products, including semiconductors, an essential part of EV production.
China is perhaps the most significant threat to Tesla’s success in Europe and in the European market for native electric vehicles; Chinese companies have repeatedly shown their ability to overproduce their competitors at lower prices throughout the energy transition. This has been demonstrated time and again, perhaps most blatantly by the dumping of solar panels from China, which has lowered the cost of global photovoltaic cells so dramatically that US manufacturers have taken action by the US Department of Commerce. United States attempted safeguard the US solar industry by imposing tariffs and quotas in 2018. China bring a WTO case against the United States for these measures; however, he rejected China’s claims and backed the United States (albeit with little effect so far).
Chinese companies are looking to Europe to replicate their success in mainland China. Sales of electric vehicles in China nearly tripled in 2021. With large companies including SAIC-GM-Wuling, BYD and Li Motors sale an increasing number of vehicles. These companies are beginning to grow and dominate production and marketing in their region.
While the average price of a sedan made by Lizou was only $ 4,400, starting prices for the average Tesla start at $ 45,000. Despite government subsidies and tax incentives, the price of a Tesla remains high, opening the door to increased international competition. Although Tesla can deliver up to 1.5 million cars in 2022 in Europe once production starts at Giga Texas and Giga Berlin, prices are likely to remain significantly higher than those of Chinese competitors.
In Germany, Tesla’s Gigafactory suggests an ever faster decoupling of hydrocarbons from the European economy. But this change is not without risks and challenges. A more robust EV market is, of course, a good thing for European energy security; Despite potential competition from Chinese EV companies, a larger EV market in Europe could reduce reliance on unsavory hydrocarbon exporters like Saudi Arabia and Russia. However, if Europe cannot solve its energy crisis by increasing the production of basic electricity, manufacturers of electric vehicles will be at a disadvantage by increasing their sales and reducing their CO2 emissions in the Old Continent.
With the help of Riley Moeder