Europe Car Sales Drop in March as EV Weakness Persists

(Bloomberg) -- Passenger-car sales in Europe fell 2.8% in March as automakers including Volkswagen AG and Stellantis NV faced weaker demand, particularly for electric vehicles. 

New-vehicle registrations dropped to 1.38 million units last month, the European Automobile Manufacturers’ Association said Thursday. Sales of battery-powered cars fell 11% as consumers in Germany, Sweden and Norway cooled. 

The decline, due in part to the timing of Easter, is the second in four months and underscores the pressure carmakers face amid higher interest rates, weaker economic growth and the phasing out of generous subsidies to stoke demand for EVs. Volkswagen, Mercedes-Benz and Tesla have all reported lower EV sales in the first quarter of the year.

The trend is pushing some traditional automakers to rethink when they will phase out combustion engines, and others have backtracked on EV targets. In February, Mercedes-Benz Group AG pushed back its sales forecast and now expects battery-powered vehicles to be stuck at less than half of its sales for longer than anticipated. 

The impact of the slowdown has been starkest at Tesla, which this week said it will shed more than 10% of its global workforce.

Italy’s EV sales declined 34% last month as customers held back purchases in anticipation of possible new subsidies under consideration by the government. Germany’s EV sales slumped 29%, even as manufacturers such as Volkswagen introduced their own rebates in a bid to compensate for the country’s aid cuts.

While a range of new electric models convinced a greater number of buyers in markets including France and UK, sub-par charging infrastructure remains a roadblock to more widespread adoption. 

Some customers are turning to models with both a battery and a combustion engine: Sales of plug-in hybrid vehicles rose 0.7% last month, outpacing not just fully electric cars but also models running on gasoline. Sales of petrol cars in the region dropped 8% while diesel cars registrations plunged as much as 18%.

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