Car makers post a slump in profits amid weak demand for electric vehicles
Leading European car makers have posted a slump in profits as demand for electric vehicles (EVs) stalls.
Volkswagen and Mercedes-Benz said they were seeing a sluggish appetite for fully electric cars as drivers revert to petrol or hybrid models.
Germany’s Mercedes was the worst hit in the first quarter, with profits tumbling 30 per cent year-on-year to £3.3billion.
Electric vehicle (EV) sales dipped 8 per cent during the period, Mercedes said.
The luxury car maker said the slow uptake of purely electric cars was dragging on the entire industry, noting that hybrids were expected to ‘play an important role’ moving forwards.
Slowdown: Leading European car makers including Volkswagen and Mercedes said they were seeing a sluggish appetite for fully electric cars as drivers revert to petrol or hybrid models
In February, the company backtracked on sales targets, forecasting that the share of fully electric and plug-in hybrid vehicles will remain flat this year at around a fifth of overall sales.
And this trend was played out at rival Volkswagen, which also reported a slower start to the year.
Volkswagen said profits dropped by a fifth in the first quarter to £3.9billion as it struggled to offload its more premium brands like Porsche.
Earlier this month, the German group revealed EV sales in Europe fell by 24 per cent in the first three months of the year as high inflation and rising energy prices softened demand.
But Jeep and Vauxhall maker Stellantis was more upbeat about EV sales, which climbed 8pc during the first quarter.
The group has launched four models since the beginning of 2024, out of a total of 25 planned for the full year, including 18 EVs.
However, the firm, whose brands include Peugeot, Fiat and Alfa Romeo, said revenues were down 12 per cent year-on-year to £36billion as overall shipments fell.
Mamta Valechha, analyst at investment manager Quilter Cheviot, said the figures set a ‘sobering tone for the quarter.’
The figures come at a testing time for manufacturers which are balancing ambitious electric vehicle targets alongside supply chain challenges and questions over consumer demand.
Prime Minister Rishi Sunak’s decision to delay a ban on new petrol and diesel car sales from 2030 to 2035 has also made hybrids more appealing.
The lack of charging infrastructure has also been flagged as an ongoing concern. John Plassard, of finance group Mirabaud, said: ‘Automakers seem to be under a lot of pressure. However, we seem to be approaching the low point of the cycle.’