High EV Prices Could Derail Europe’s Vehicle Electrification Ambitions

August 31, 2023 12:59:05

Experts warn that high electric vehicle prices in European nations could derail the EU’s plan to transition from petrol and diesel-powered cars to battery electric vehicles (BEVs). As part of global efforts to limit fossil fuel use and combat climate change, the European Union has pledged to phase out internal combustion engine (ICE) vehicles for BEVs.

BEVs are powered by rechargeable lithium-ion battery packs and produce zero emissions at the tailpipe, making them cleaner alternatives to conventional vehicles. However, prohibitively high electric vehicle prices have kept many drivers from transitioning to EVs since the industry’s inception and have the potential to hold back EV adoption in the future.

Even with subsidies and incentives from governments, the cost of purchasing and owning an electric vehicle is so high that the EV market is mostly limited to high-earning individuals with plenty of disposable income. Transport and Environment analyst Jula Poliscanova says that the campaign group has learned that there simply isn’t enough incentive for the average driver to purchase and own an EV.

Furthermore, even though greenhouse gas mitigation efforts such as shutting down coal-fired power plants and building wind turbines to generate clean energy have been relatively effective, emissions from transport have largely negated these gains. As such, German clean transport think tank Agora Verkehrswende head Chrisitan Hochfeld says the transition to EVs is critical to cutting down emissions over the next decade.

The European Union currently plans to cut down emissions from transport by 55% from 2021 to 2030 and to zero emissions in 2035. Achieving these goals will be a struggle if electric vehicle prices remain at current levels. Even though EVs make up their high initial costs through their lower running and maintenance costs in the long term, the relatively high upfront price puts off many drivers.

Incentives and subsidies from governments have had moderate success in encouraging consumers to buy clean-energy vehicles. The European Automobile Manufacturers Association (ACEA) notes that 21 members of the EU already offer residents tax breaks for buying low-carbon vehicles while 20 offer financial aid for customers buying low-carbon cars. In Romania, for instance, residents can receive up to €11,500 ($12,423) to subsidize their EV purchases. France exempts EVs from weight-based penalties and offers a purchase bonus worth €5,000 ($5,401) while Belgium provides incentives for company cars. France has also introduced a program to allow poorer households to rent EVs for €100 ($108) per month to promote electric vehicle use in lower-income communities.

EV startups such as Mullen Automotive Inc. (NASDAQ: MULN) have an opportunity to develop affordable electric vehicle models that can attract cost-conscious buyers in Europe and other major markets such as the U.S.

NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN

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