What’s Going On Here?Carmakers just can’t get through a single day unscathed: data out on Wednesday showed that European car sales fell for the ninth straight month in March. What Does This Mean?European carmakers have been battling supply shortages for months, and war in Ukraine has only made things worse. The conflict’s sent more shockwaves through Europe’s supply chains, leaving even the region’s biggest carmakers struggling to keep up with demand. That’s showing up in their sales: Mercedes, BMW, and Volkswagen sold 18%, 23%, and 25% fewer cars last month than the same time last year. In fact, all four major European markets – Germany, France, Spain, and Italy – recorded fewer registrations last month versus the same time last year. That meant total European car sales fell by 19% last month, resulting in an 11% drop over the whole first quarter. And there might be another problem ahead: forecaster LMC Automotive reckons that by the time parts are readily available again, high inflation could swoop in to hit demand. Why Should I Care?The bigger picture: Pay up, drivers.
Those supply issues have increased the average cost of electric vehicle (EV) batteries by over 50% in the last year alone. And while EV makers have simply been passing those higher costs onto customers, that doesn’t seem to have put buyers off yet: data out this week showed global EV sales more than doubled last quarter from the same time in 2021.
Zooming out: The future’s electric.
Analysts reckon the EV boom is here to stay, especially as continued investment in the space should bring costs back down. Just look at the world’s two biggest EV battery makers: CATL and LG Energy Solution separately announced they’ll invest $6 and $9 billion toward building mines-to-manufacturing battery supply chains in resource-rich Indonesia. The move should help them reduce their reliance on Chinese suppliers, while limiting their exposure to volatile material prices following the war in Europe. | 