Electric cars are too expensive, some brands will disappear.

Europe is losing the battle of electric cars, which will profoundly change the face of the European industry in the years to come. But what are the reasons for this observation?

For years, Europe has been subsidizing the purchase of electric cars in an attempt to promote and accelerate the adoption of these vehicles by the population. The problem is that the price of electricity is linked to the price of oil, and bills have skyrocketed in a completely absurd way since the conflict in Ukraine. Electricity prices were already very high before this conflict. Now, electric vehicle sales are declining significantly, and many buyers are turning to gasoline vehicles. This is just part of the problem. Labor costs in Europe are too high in the major European countries, and major car manufacturers are starting to feel the effects. Additionally, battery recycling for cars is still in its infancy.

Although the issues are different in the USA, a company like Ford is struggling to make its electric models profitable for the general public. You can read this article on CNN (https://www.cnn.com/2023/07/27/business/ford-earnings/index.html). It is evident that the cost of research combined with production costs is not profitable for entry-level electric vehicles. To attempt to keep a portion of the entry-level market in both Europe and the USA, it would be necessary to offer a very limited range of low-cost vehicles. In both Europe and the USA, the brands that will succeed are those focused on luxury vehicles and those concentrating on industrial vehicles such as buses, trucks, and vans.

In China, we have the example of the MG brand, which was acquired from the English and offers very good, almost luxurious vehicles at low prices. This is just a taste of what the Chinese industry will be capable of delivering very quickly in both Europe and the USA in terms of quality in entry-level electric vehicles. Neither Europeans, Americans, nor Japanese manufacturers will be able to compete in this segment.

Clearly, traditional electric vehicles will not be the only solution. Hydrogen is gaining ground, and it is less polluting to produce than the nuclear industry, which is highly polluting in the long term. The one constant, regardless of the choice of energy in the future, is the need for batteries to store energy, and there are some exciting innovations in this field as well.

The other battle is in the realm of computerized driving. In this regard, Tesla is losing the battle. Many manufacturers, including Volkswagen and Jeep, are known for integrating TomTom technology into their vehicles. It is less known, but TomTom technology is also integrated into Mercedes vehicles. In this area, automated driving without the need for a human driver yields much better results than what Tesla can achieve. Other luxury car manufacturers have agreements with TomTom and combine their own technology with TomTom’s, which generally produces good results. Clearly, we are only at the beginning of a major technological shift where quantum computing will likely have a role at the heart of our vehicles, more rapidly than one might imagine.

Thierry De Clemensat

Editor in Chief

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