Electric cars and hydrogen transportation are slowing down / by Alexander Frolov, deputy director “The National Energy Institute” / 27.10.2024
For the last two and a half years the European Union finally decided to refuse cars with internal combustion engines, to introduce restrictions on electric cars from China, and also confirmed the purpose to make and import by 2030 on 10 million tons of «renewable» hydrogen.
But at the same time the quantity of protests against the accelerated refusal of internal combustion engine in the European Union only increases, sales of electric cars started decreasing, and «renewable» hydrogen find noticeable demand neither in the industry nor on transport.
Three main markets
Last year was successful for a world car market. Car sales (after all specifying calculations made OICA including also commercial transport) exceeded indicators of 2019, having made 92.72 million units. For comparison in 2019 — 92 million, in 2020 – 79.7 million, in 2021 – 83.64 million and in 2022 – 82.87 million were realized.
The problem of the market was that 2019 was not outstanding. Moreover, the peak of sales fell on 2017 when it was sold 96 million cars according to OICA. In 2018 this indicator made about 95 million. In other words, 2019 was the year of crisis for a car market. Making comparisons with it is certainly convenient, but not much more than that.
At the moment there are three main markets in the world: China, the USA and Europe. The considerable part of decrease in sales which fell on 2018 in comparison with 2017, belonged to the Chinese market (minus 0.8 million). Besides in 2017 the People’s Republic of China reached peak of sales – 28.88 million.
Through 2020, the markets in the United States and Europe (including the countries of the European Free Trade Association, the EU, and the United Kingdom) either grew slightly or remained relatively stable. And in China sales were reduced to 25.77 million in 2019. It is all the same huge size. For comparison, in the States then 17.48 million cars and in Europe – 18.37 million were realized. But the situation sharply changed in 2020.
From this point the Chinese market considerably strengthened the positions. Problems at the USA and Europe where from the beginning of a pandemic of sale fell to 14.88 million and 14.1 million respectively began. And in the People’s Republic of China then decrease, but insignificant — to 25.3 million was observed. The Chinese market was on pause because of a covid, but quickly recovered (though the pandemic continued to affect business activity and after 2020).
«Partial restoration»
It is easy to notice that Europe relatively appeared the most vulnerable market: minus 4.4 million sold cars in relation to 2019. After the covid 2020 the situation poorly changed: in 2021 14.14 million cars were realized (that is at the level of 2020), and in 2022 sales fell off to 13.29 million. 2023 could give a hope — the car market grew by 13.8% (to 15.13 million). Though the term «grew» is not absolutely right, it would be more exact to tell «was partially restored».
The United States after covid failure of 2020 in 2021 corrected the situation a little — the car market grew up to 15.4 million units. But in 2022 there was the next failure as well as in Europe — to 14.23 million. And 2023 brought partial restoration — to 16 million.
Total fluctuations of a car market of the USA were more than considerable, and advantageously it looked only against problems of Europe.
And here the car market of China increased in 2021 by 1 million — to 26.3 million, and showed continuous growth further: in 2022 – 26.86 million, in 2023 – 30.1 million. That is, it is the only one of the three major markets that has gone from recovery to growth, breaking previous records.
If in 2017 the People’s Republic of China occupied 30% on the world car market, the USA – 18.3% and Europe – 18.7%, following the results of last year a share of China increased to 32.45%, and here at the USA and Europe it was reduced to 17.3 and 16.3% respectively.
It is remarkable not only decrease in a share of the European and American car markets, but also that fact that Europe conceded the second place to the States. Moreover, the peak of sales in the European region fell on 2007 (18.87 million), and since then it was succeeded to come nearer to this indicator only in 2019 when sales made 18.37 million.
The peak is passed
The reasons for the crisis facing the auto markets were manifold. The most prominent of these was the pandemic, but also the semiconductor shortage amid the second mining boom, as well as the global energy crisis, contributed to the problem.
But if to speak specifically about Europe, its problems have much deeper roots. Its auto market has been the most vulnerable of the three largest, and its energy market has literally fallen under the weight of the global energy crisis. But the most remarkable is that moment that the peak of car sales in this region coincided with the beginning of long industrial crisis and problems in power which fully were not overcome since the end of the 2000s. That is, Europe’s development peaked in 2007-2008, after which fundamentally important sectors of its economy were only approaching their peaks, but growth (especially sustainable growth) was absent as a phenomenon.
But instead of solving the problems which are saved up for the last one and a half decades, the authorities of Europe preferred to be knocked persistently by the head about very strong walls. Or, as they called it, continued to follow the strategy accepted at the end of the 2000s in the field of power in particular and economies in general, though this strategy repeatedly proved the insolvency.
One particular instance of this behavior was the total ban on the sale of new cars with internal combustion engines in the EU from 2035, supported by the European Parliament in June 2022. Earlier this plan was presented by European Commission, and outside the EU Great Britain decided to follow it.
There was certain logic for this act despite the skepticism designated by us. First, refusal of fossil fuel is a part of the European power strategy. Secondly, the logic of «the fourth power transition» (differently — «green» power transition) means transition to the electric power in all possible areas, including transport. Third, the development of the electric segment was to stimulate its own automobile production and related economic sectors (e.g., battery production).
If it were not for the insidious reality surrounding Europe and if it were not for the market context in which it was immersed, all this would have made sense. But already at the first stage, the EU authorities faced resistance from the car companies.
To strike on the Chinese deliveries
European automakers have tried to convey a simple message to the wise Brussels: if such a rapid ban on the sale of internal combustion engine vehicles is imposed in the hope that all consumers will quickly switch to electric vehicles, those electric vehicles will be mostly Chinese. As, incidentally, are the batteries, the production of which the European Commission hopes to poach from the EU.
We must pay tribute to Ursula von der Leyen and her colleagues — they drew conclusions from what they heard. The only bad thing is that these conclusions were wrong. They decided that it was simply necessary to hit Chinese supplies hard.
In other words, the European Commission decided to find out how things are with subsidizing Chinese automakers and whether China is violating the sacred norms of market competition. After all, it is obvious that if you are in a country where the entire value chain is realized (from raw material processing and battery production to the production of electric cars); your prices should be the same as those of the countries that buy batteries from you.
One cannot help but notice that the European Commission is at least consistent in its original view of reality. So, in the 2010s the European Union entered protecting duties against the Chinese solar panels, hoping to rescue the producers from ruin. It was not succeeded to rescue them, and duties had to be cancelled, but it, most likely, no reason not to try to step on the same rake again.
«Customer-oriented» duties
In April of the current year one of Heads of the German association of an automobile industry, acting in the Bundestag, declared that the Head of European Commission independently announced a decision to begin investigation against the Chinese producers of electric cars, without having consulted to representatives of the branch in Germany. This is perceived as a risk by the industry, as sanctions against Chinese electric cars could cause a backlash. Running forward, we will notice that representatives of car makers were absolutely right.
In June 2024 the authorities of the European Union declared that enter protecting duties against the Chinese «pure» electric cars. More precisely, the European Commission referred to the «current investigation» during which it «tentatively came to a conclusion that the chain of value creation of electric cars (BEV) in China benefits from unfair subsidizing that creates threat of economic damage to producers of electric cars in the EU.
Certainly, if the People’s Republic of China support the producers, its «unfair subsidizing» if try to do the same in the European Union, it «reasonable economic policy».
But we will reject sarcasm and irony. The European Commission declared that «appealed to the Chinese authorities to discuss these conclusions and to study possible ways of the solution of the revealed problems according to requirements of the WTO». In the meantime, she’s «tentatively» outlined the level of «temporary countervailing duties.»
One cannot help but notice that the European Commission clearly has some good marketers in its ranks: the notion of «barrier duties» has negative connotations, while «countervailing duties» sounds much more customer-oriented. However, the initially announced level of these «customer-oriented» duties caused slight consternation: for BYD — 17.4%, Geely — 20%, SAIC — 38.1%, and for other manufacturers — from 20% to 38.1%.
Not strategists
At the beginning of October EU member states voted concerning duties, and the result of vote allows European Commission «to start implementation of the offer on introduction of final countervailing duties for import of the electric cars made in China».
But European carmakers aren’t too thrilled about it. On the one hand, they carefully call the authorities of the EU and China for dialogue continuation. On the other hand, once again pay attention to the fact that lack of system approach without which production of electric vehicles in the EU will not be able to fly up.
It is remarkable that else in December, 2023 the CEO of the European association of car makers (l’Association des Constructeurs Européens d’Automobiles, ACEA) Sigrid de Friz noted: «Unlike China and the USA, there is no reliable industrial strategy in the EU for support of production of electric cars».
At the same time the detailed report by the Parisian Polytechnical School (École Polytechnique) — «Comparison of the Chinese, European and American standard and legal base for transition to decarbonized road mobility» was issued. It demonstrated disconnect between the EU’s policy objectives and its regulatory and production capabilities.
In October 2024, ACEA had to broach the idea of the need for a systematic and more in-depth approach once again. The association noted that free and honest trade it is very good and even in some places fine, but it is «only one of aspects of global competitiveness». According to ACEA’s assessment, in order for the European automotive sector can compete in the global electric vehicle race, a comprehensive industrial strategy is required.» And it includes crucial materials and available energy with which the European Union experiences many years some difficulties.
ACEA hopes that there will be no «countervailing duties,» that the parties will find some alternative. After all, the EU is dependent on Chinese supplies, and the current state of the electric car market is not exactly healthy.
95% of the electric cars market
China, the USA and Europe are not only largest car markets in general, but also the largest markets of electric cars on which, according to the International Energy Agency (IEA), which accounted for 95% of sales in 2023. That is to say there is virtually no market for electric vehicles outside their borders.
The total of sales last year came nearer to 14 million units. From this number of 60% it was realized in China, in Europe — 25%, in the USA — 10%. The Chinese producers occupy 53% of the market of electric cars. Only one BYD is 21%. For comparison, on the second place there is Tesla with share in 13%.
IEA notes that in China in 2023 was registered 8.1 million new electric cars, «that is 35% more, than in 2022″. And separately stipulates — «the increase in sales of electric cars became the main reason for growth of the automobile market in general which was reduced by 8% on ordinary cars (with internal combustion engines), but in general grew by 5%».
China last year became the largest exporter of cars — over 4 million pcs was sent abroad. Besides export of the electric cars entering this indicator reached 1.2 million that is 80% higher than indicators of 2022. The main part of deliveries went to Europe and ATR.
It is obvious that at such a structure of sales potential difficulties in the European market will look offensively, but is not deadly. After all Chinese producers will be left with China, as well as the rest of the Asia-Pacific region. However, the main advantages of China (and the main fears of the European auto makes) are connected not with deliveries of vehicles.
About 75% of world capacities for production of accumulators fall to the share of the People’s Republic of China. The country is also one of the leaders in the field of rare earth metals and even requires more than 73 kg of copper.
«Indisputable domination of China»
As notes École Polytechnique, «almost indisputable domination of China today is the result of long efforts which originate from development of a chain of value creation of rare-earth elements in the 1960s». In other words, it was not about the momentary desires of individual politicians (or political circles), but about a progressive movement, which, in fact, began more than half a century ago.
By the way, according to IEA, 2023 became the first year, «when the Chinese industry of vehicles worked at new power sources without support of national subsidies for purchase of electric cars». Though the part of measures of support remained (for example, tax privileges), but it a little than differs from similar measures in Europe, the USA or Russia. Somehow imprudently data of the International Energy Agency disprove statements of members of European Commission. However, IEA for certain will introduce the necessary amendments in the following report on the market of electric cars not to deviate the correct political line.
So far China took a reciprocal step on unfriendly actions of Brussels. After members of the EU voted for introduction of protecting duties, the Ministry of Trade of the People’s Republic of China declared introduction of temporary anti-dumping measures for cognac from the EU. Besides, the representative of the ministry noted on October 8 that anti-dumping and countervailing investigations concerning a number of foodstuffs from the European Union are begun (pork, dairy products and so forth). And for those who don’t understand transparent innuendo, he added that China is studying measures such as raising tariffs on imported cars.
People’s Republic of China positions in the conflict which was initiated by European Commission, look stronger. Especially as the car market of Europe shows signs of the accruing crisis again, besides including an electric segment.
Four months of recession
It is impossible to say that the future of the world’s autarky is represented as cloudless. So, the analytical center The Economist Intelligence Unit predicted that automotive industry in 2024 «will face the next recession because of delay of consumer expenses, high interest rates and failures in chains of deliveries because of geopolitical intensity». But the the forecast for an electric car segment was more than favorable — growth of sales of 21%.
A similar position was taken by the International Energy Agency which forecasted a 20% growth — approximately to 17 million sold electric cars (thereof more than 10 million in China, 3.4 million in Europe and 1.7 million in the USA).
Results of the first quarter were encouraging. In the People’s Republic of China, according to IEA, 1.9 million electric cars were sold that for 35% exceeded indicators of the same period of 2023 (the truth, indicators of other quarters of 2023 were either higher or comparable). In the USA for January-March 0.35 million (growth by 15%), and in Europe – 0.8 million (growth by 5%) were sold.
But already to the middle of 2024 the European market started being in poor shape.
According to ACEA, in August «pure» electric cars occupied 14.4% of cumulative sales on a car market of the EU. That’s a huge amount. But in August of last year this indicator made 21%. Besides the number of the registered electric cars was reduced by 43.9% — to 92 627 units (in comparison with 165 204 for the similar period of last year). In only one Germany this indicator failed for 68.8%.
«Registration», by the way, includes not only the cars sold to the final owner but also those cars which are acquired by the dealer centers. Therefore data on real sales can differ.
The number of the registered «pure» electric cars in the EU for the first eight months was reduced by 8.3% (to 0.9 million), and the loaded hybrids — for 5% (to 0.5 million). In general the carmarket of the European Union for January-August increased but only for 1.4%. And only at the expense of the usual hybrids which grew up for 21.1%.
Reduction of electric car segment in Europe began in May. That is it proceeds at least four months in a row (at the time of writing of article the statistics for September is not published). Considering the saved-up dynamics, the weak growth of the European car market following the results of 2024 may turn into a decline.
By the way, a share of «pure» electric cars in vehicle fleet of the EU at the moment is about 1.2%, the loaded hybrids — 1%, cars on natural gas – 0.6%. The leader of an alternative segment in the European Union is propane-butane (2.6%).
The total of the sold electric cars of all types for the first eight months in Europe (including Great Britain and some more the countries) was reduced from 1.91 million in 2023 to 1.83 million in 2024. To justify forecasts of growth for 2024 which generously distributed IEA after the first quarter, the European market should grow for the remained months the advancing rates.
So far the situation looks so as if at best the market will only repeat last year’s progress. That in turn calls into question whether the target of 17 million electric cars sold worldwide is achievable.
Elections and lithium crisis
It is not only Europe but also the US that adds to the doubts. A real drama is being played out in this market due to the intensification of internal political struggle before the presidential election. Internal combustion engine cars and electric vehicles have unwittingly become markers of different political forces, although contradictory markers, given Ilon Musk’s position.
In view of the increasing heat of pre-election passions the news about the American car market are perceived by wide audience especially sharply. At some point a part starts celebrating delay of the market of electric cars, then data for the second quarter come, the Management of Power Information at the Ministry of Energy of the United States declares that «the share of sales of electric cars and hybrid vehicles in the USA increased in the second quarter of 2024″ then victorious reports start arriving from «electric» camp.
Problem of the American market is not only in political hysteria, but also in quite objective problems, for example, the lithium crisis, which caused a rise in the price of electric vehicles. After the end of the acute phase of the crisis, prices were adjusted, but they never returned to their previous values. And especially there was no decrease of electric cars prices that was promised for years.
At last estimates of results of the third quarter 2024 arrived. According to Cox Automotive, for July-September car makers in the USA sold about 346.3 thousand electric cars (5% more than in the second quarter of 2024). The special pleasure in part of the American audience was caused by that fact that electric cars occupied record 8.9% of total amount of the sold cars.
For the first nine months 2024 about 0.95 million electric cars were sold in the United States. For the same period of last year it was sold 0.87 million. The data arriving from the USA are slightly lower than estimates of the International Energy Agency. And the gain makes at the moment about 9%. That’s not insignificant, but far from the 20% increase projected for this year by the IEA.
In the event of an escalation of relations with China in the field of electric vehicles, given the latter’s role in the entire value chain, the U.S. market’s accumulated price problems to date would be worsened. That is, a spat with China would hit the electric car segment of the United States.
Completion of the first phase
In our country the current year is special for the market of electric cars. In August 2021 Concept for the Development of Electric Transport was adopted. In its framework it was supposed that at the first stage (2021-2024) in Russia «not less than 25 thousand electric cars» would be produced. It doesn’t look like that those plans have come to fruition.
At the moment we have two conditionally Russian electric brands — Evolute and Moskvich. According to Avtostat, in the middle of 2024 the number of the electric cars of Evolute made 2.9 thousand pieces, and electric cars of Moskvich — less than 2 thousand. The three of leaders among electric cars in Russia was at that time was represented by Nissan (15.5 thousand), Zeekr (8.1 thousand) and Tesla (6.4 thousand).
Moreover, during the third quarter of 2024, the electric car market in Russia was declining in annual terms, although for nine months, according to the estimates of by Avtostat, the growth amounted to 60%. In total it was sold to 13961 pieces (for all 2023 realized 14089 pieces). Thus the total of electric cars in Russia following the results of the year has to make about 55-60 thousand. But it is general indicator; sales of the Russian brands in September reached only 214 pieces. For comparison, the Zeekr brand (586 pieces) became the leader of sales in the same month.
Also the first stage of implementation of the electric transport concept meant start in operation not less than 9.4 thousand charging stations, from which not less than 2.9 thousand — fast. According to Avtostat, in the middle of 2024 7410 points of charging, from them fast — 2555 were in our country.
Following the results of the year fast charging stations have chances to reach the indicators stipulated in the concept.
Hydrogen falling
FCEV — cars on hydrogen fuel elements (hydrogen fuel cell vehicles), are also a type of electric cars. They received perhaps even more attention than other types of electric transportation over the past four years. After all, hydrogen cars were to be part of a larger system that would steadily lead mankind into the bright future of the green energy transition.
From 2017 to 2022 inclusive sales of FCEV grew for 25.1% a year. In 2023 recession began. It was originally reported that for all last years it was sold 14451 hydrogen cars, and in 2022 this indicator made 20704 pieces. Then the results of 2023 were reconsidered towards increase — to 16413 pieces. That does not cancel the general dynamics.
For the first half of 2024, according to SNE Research, 5621 hydrogen cars were sold in the world (34.1% less than for the same period of 2023). In China (the largest market) volumes of realization were reduced from 2996 in January-June, 2023 to 2501. In South Korea they failed for 41.8% (to 1742), in the USA — for 82.4% (to 322 pieces).
But sales in Europe (from 489 to 594 pieces) and Japan increased (from 202 to 440). For comparison, for last year two EU largest hydrogen markets (Germany and France) in total grew by 569 hydrogen cars.
Moreover, with such growth rates, the EU expects that by 2030, hydrogen refueling stations on major highways should be placed every 200 kilometers. How it turned out that the number of gas stations will exceed quantity of hydrogen cars.
On this background Equinor decided to leave the construction project of the sea hydrogen pipeline for deliveries to Germany with RWE because of low demand for this energy resource. Also it is not the first project which suffered such a fate. And in the last report of Global Energy Perspective 2024 the company McKinsey & Company reconsidered increase in production of hydrogen till 2050 towards decrease by 10-25% (in comparison with the previous estimates).
By the way, by the end of 2024, the European Union should have 6 GW of electrolyzers installed, and the volume of «green» hydrogen production should reach 1 million tons. Now the numbers are ten times smaller, and we have just over two months left to fulfill the plans stipulated by the Hydrogen Strategy.
In the context of a worldwide decline in interest in «green» hydrogen in general and hydrogen cars in particular, there is little chance for this area of motor transportation to occupy any noticeable niche. But the state money will join this direction and different countries will start strengthening pressing for the sake of achievement of strategic indicators (which at the moment the market persistently ignores). For Europe, with its growing economic crisis, this will mean tougher inter-fuel competition in the alternative segment. Few FCEV swill inevitably lose the battle for consumer attention to electric cars and even to not the most popular today in Europe gas-powered vehicles.