Electric car production drops by a fourth as demand falls

New figures reveal that the production of hybrids and electric cars fell by 25,9% last month due to a decline in demand. According to the Society of Motor Manufacturers and Traders (the car industry’s body), this led to a decrease in their share of the overall car production to 29,6 per cent.

The trend will likely reverse in the long term, as more battery-powered cars become available. The SMMT reported that the overall car production in Britain fell by 8 percent in August as factories also ceased production of key models.

According to the Zero-Emission Vehicle Mandates, this year 22 percent of all car sales must be electric vehicles. The percentage will increase to 28 percent next year, and then continue to rise until 80 percent of all car sales are electric by 2030. The Labour Party has promised to ban petrol and diesel vehicles by the end the decade. This means that the remaining 20% are likely to be hybrid cars.

If they fail to reach the target, carmakers will be fined £15,000 for each diesel or petrol vehicle sold. However, they can avoid these fines by purchasing credits from electric car manufacturers, like Tesla, or those who have already exceeded the target. The manufacturers and dealers have lowered the prices of electric cars this summer in order to clear out showrooms before the fall. Most of the demand for electric cars is from fleets and companies, who are eligible for company car tax incentives, as opposed to cash-strapped individuals.

Nissan Sunderland factory’s production line for hybrid Nissan Juke and Nissan Qashqai sport utility vehicles The drop in production of electric vehicles reflects a downturn in the European car market. The European Automobile Manufacturers’ Association (the trade body) released figures showing that battery electric car sales fell by 43,9% to 92 627 in August. They now account for just 14.4% of the European Union’s auto market, down from 21% last year.

The disparity in green incentives between EU countries is reflected in the declining sales of electric vehicles. In order to prevent cheap Chinese cars from entering the EU, regulators have also imposed high tariffs. This could increase purchase prices.

Stellantis is the owner of Vauxhall and has announced that they will launch an electric car made in China, which they plan to sell for less than £16,000. This comes at a time when western brands are racing to launch their models to compete with Chinese manufactures. August is usually the month with the lowest volume of production. Many carmakers take advantage of the long summer holidays to upgrade their factories, and to make room for electric vehicle production. The SMMT reported that production for the domestic market fell by nearly 20 percent, while exports dropped by 5.9 percent.

The UK’s car production has fallen by 8.5% to 522,823 vehicles in the past year, but output on the domestic market has increased 12.3% despite the August decline.

Nearly 50% of Britain’s car exports went to the EU, while America and China were in second and third place, respectively. Mike Hawes is the chief executive of the SMMT. He said that August would always be a quieter time due to the summer shutdowns as well as factories preparing for the switch to new models. However, he also added that the industry remained hopeful about a return to a growth following the record investment announced by manufacturers in the past year.

“Realizing those investments and securing even more depend on the UK’s industry maintaining its level of competitiveness. We look forward to both the chancellor’s autumn budget and government’s proposed Industrial Strategy as crucial opportunities to show that it supports auto.”