Who has not stopped to think about the direction their life is taking or had a small identity crisis? Well, the European automotive industry is experiencing something similar. After so much talk about ambitious plans and the electric future… Porsche and Mercedes-Benz are lifting their foot off the accelerator… Are they unsure, or what is happening? The truth is that the market is not responding at the pace they expected, and of course, manufacturing electric vehicles is quite expensive, and if the infrastructure does not keep up, everything becomes more complicated.
A slowdown in the middle of the road, but careful, they are not abandoning the idea of electric cars, they simply believe that Europe is not yet prepared for a full transition, and the German manufacturers (who have always been known for having everything perfectly planned) have decided that there is no need to risk more than what is already at stake. Project cancellations, platform delays and a cautious glance back at combustion… Pure realism about what the consumer wants!
Germany loses momentum
For years, German manufacturers seemed to be going full turbo in the electric car race. Basically because that was what the world was asking for, Brussels becoming increasingly strict about combustion, Tesla setting the pace and China stepping on their heels… Everything suggested that electrification had taken a path with no return.
But public subsidies disappeared just when they were needed most. The European economy began to cool down. And companies realized that producing batteries is much more expensive than expected (and that electric cars still leave less profit margin than combustion cars, which is important to mention).
So after reviewing all possibilities, they decided to slow down. No new investments, dozens of delayed projects… The transition has definitely not gone as expected (mainly because it has not happened).
China: cheaper and more competitive cars
Talking about electric cars also means talking about China. They have a gigantic industrial ecosystem (and backed by their government), their production costs are much lower and that makes consumers much more interested in these cars.
And the European consumer is more cautious than ever: high prices, limited range, few charging points… and they think “better wait a bit”, and it is in that gap where Chinese manufacturers enter, already gaining territory in Europe.
From the electric fever to protecting their profit margins
Porsche’s case is one of the most striking because for years it bragged about technological leadership, independence and full electrification. But now, for whatever reason, not anymore.
The brand canceled an electric high-end SUV project whose negative cost reached 1.8 billion dollars. Insane… The collaboration with Cellforce to produce high-performance batteries was also not progressing as planned, and demand was below expectations.
So they had to make a decision, and it was to protect their profits. They return to combustion vehicles even though they still keep an eye on the Taycan and the Macan.
Hitting the brakes
Mercedes has also slowed down. Its plan to sell only electric cars by 2030 has deflated rapidly, and they confirm that they will continue producing combustion engines beyond that date.
They have slowed the development of 100 percent electric platforms and are reinforcing their hybrid lineup. Mercedes cannot afford to give up combustion engines right now just to earn a nice headline.
A less epic transition…
None of this means that the electric car has lost the fight (fortunately), but what is happening is that the brands have realized they cannot move faster than the market itself, and if the market is not ready to take the leap…
The future will be electric, yes. But also hybrid, and for longer than many imagined.