Electric car sales fall 37% in Germany as slump deepens

Germany's electric vehicle sales slumped in July, extending a broad pullback since incentives ended late last year and undermining automakers' plans to shift to selling EVs.

Registrations of battery-powered cars fell 37 percent in Europe's biggest auto market to 30,762 vehicles compared to a year ago, Germany's federal motor transport authority KBA said Aug. 5.

It's the biggest drop since December when the German government suddenly scrapped EV subsidies. Sales of vehicles without a plug gained 7 percent.

The broad EV slowdown across Europe wherever incentives are removed is leaving automakers such as Volkswagen Group wrong footed on production plans while the overall shift is stumbling.

Well-off, eco-conscious buyers are more or less tapped out, and the industry's lack of affordable battery models is cutting mass-market consumers out of the market.

“The ramp-up of e-mobility is proving to be unsustainable so far,” Constantin Gall, a consultant at EY said about the German results. “The market has lost all momentum and many customers doubt the prospects of electric cars.”

The share of EV sales in Germany in July slumped to just under 13 percent from 20 percent a year earlier, according to EY, at a time when automakers expected rapid uptake of battery-powered vehicles.

Registrations in Sweden, an EV leader, also fell in July to compound a slump since the start of the year. New electric car registrations dropped 15 percent in the month compared with last year, according to Mobility Sweden. EV sales in Switzerland fell by 19 percent.

The slowdown leaves the auto industry exposed after investing billions in the ramp-up of the technology.

VW, Europe's biggest automaker, said last week it has cut capacity at high-cost plants in Germany and also might change the timing of its battery-production ramp-up.

The slump in EV demand has also dimmed the mood on business prospects of the country's automakers that also include Mercedes-Benz and BMW, according to a survey.

EY's Gall said that EVs sales in Germany will remain subdued for the coming months, challenging automakers' plans to boost sales and comply with stricter fleet emission targets in the European Union from next year.

VW is particularly at risk and may face a €2 billion ($2.2 billion) negative impact on earnings next year as a result, UBS analyst Patrick Hummel said in a note.

The drag from the worsening slowdown in the region is spreading with battery cell projects being put on hold. French supplier Valeo is seeking buyers for two plants that don't do sufficient business. One of them had already been revamped to produce EV car parts.

OPmobility, another French partsmaker, said EV output was roughly half of what manufacturers had been expecting.