Sales of electric cars are increasing worldwide and in Europe, with a growth of 17% in the first half of 2023 compared to the same period in 2022. However, some brands, including Volkswagen and Fiat, are deciding to suspend production of their electric models due to insufficient demand.
Volkswagen suspends production of its electric models
Volkswagen recently decided to pause production of its flagship model, the Volkswagen ID.3, as well as its equivalent, the CUPRA Born, for the first two weeks of October. This is not the first time that the German brand has taken such a decision: last June, production of the Volkswagen ID.4 and ID.7 at the Emden plant was already reduced. The reason given by Volkswagen is simple: supply exceeding demand. Rather than selling the cars in stock at heavily discounted prices, which would harm their operating margin, the brand prefers to temporarily stop production.
Stellantis and the production of the electric Fiat 500
Fiat owner Stellantis Group has also halted production at its Mirafiori plant in Turin. The plant produces the electric Fiat 500 and some Maserati models. Production was suspended this week and will be suspended again from October 19 to November 3. A Stellantis spokesman pointed to weaker demand as the main reason. Manufacturers are therefore left with a surplus of electric vehicles that they are struggling to sell, preferring to suspend production to adjust their supply to demand.
Reasons for a changing market
While sales of electric cars are increasing in Europe, the problem seems to be specific to certain manufacturers. They may have overestimated the speed of adoption of electric cars, which is highly dependent on subsidies and the purchasing power of consumers, which vary from country to country. Volkswagen had positioned the ID.3 as the car of the modern people, hoping for a success comparable to that of the Beetle or the Golf. However, the reality is that sales have not followed, in particular due to a high price, around 12,000 euros more than a Golf.
The perceived quality of Volkswagen models
Despite perceived quality that is sometimes criticized (plastics, haptic buttons, software), Volkswagen models such as the ID.3 and ID.4 remain popular. In the first half of 2023, these two models were among the best-selling, with the Skoda Enyaq, which shares their platform, also occupying a good position on the market. Chinese cars, despite their attractive price, have not yet had a significant impact. The MG brand, however, with its MG 4 model, managed to climb to sixth place in sales with 30,779 units in the first half of 2023.
Tesla dominates the electric car market
The real reason for this situation lies in Tesla’s success. The American brand has not only been able to predict the evolution of the market, but has also shaped it. Offering vehicles with an excellent price-range-equipment-performance ratio, Tesla also benefits from a reliable and extensive charging infrastructure. Tesla has been able to create a solid brand image, making its cars a desirable product beyond traditional criteria. For many, the term “electric car” immediately brings to mind Tesla. In the first half of 2023, Tesla sold 179,152 cars in Europe, or 19.2% of the market, with only two main models.
Volkswagen and the competition
By comparison, Volkswagen, Europe’s second-largest seller of electric cars, has just 8.3% of the market. Demand is clearly shifting to Tesla, despite other brands’ efforts to offer electric alternatives. Tesla has revolutionized the sales and image of electric cars, offering over-the-air updates, features like Autopilot, and a promise of autonomous driving. As a result, customers feel part of the brand’s story.
The future strategy of brands
Like the iPhone for smartphones, Tesla has become the aspiration in the electric car sector. Other brands will have to innovate and adapt to compete with Tesla, just as smartphone brands have managed to do against Apple. For potential electric car buyers, it is crucial to do your research on the models available, their range, and the charging infrastructure. Online tools can help find the ideal vehicle for each driver’s specific needs.
