Dilemma for the automotive industry and the state
Without substantial state intervention, it is likely that both the price and supply of
electric vehicles would fall in response to the low demand.
Car makers do not
have the option of decreasing supply, however. This is because ramping up the
electrification of new models is the only way for the industry to achieve the CO2
limits for new cars that have been imposed in the EU and other automotive
markets. There are also discussions about potential regional bans on cars with
certain types of combustion engine or (for example in China) on quotas for
electric vehicles that have to be met by car makers. It’s easy to see why the
automotive manufacturers are continuing to invest in electric cars in order to
improve the technology and bring down costs.
However, this requires a vast
commitment of financial resources with little or no prospect of payback in terms
of revenue in the foreseeable future.