Volkswagen’s electric car orders double in Europe

London
CNN
 — 

Volkswagen’s orders for electric vehicles shot up in Europe in the first quarter of 2024 compared with a year ago, countering suggestions that drivers may be losing interest in EVs.

New orders for electric cars more than doubled in Europe, Volkswagen said in an earnings statement Tuesday. The company does not release order numbers for other markets.

The jump in orders at Europe’s biggest carmaker comes amid concerns about slowing EV sales in the region, and as EV makers grapple with slim profits margins, squeezed by increasing competition.

“The future will be electric, this is our conviction,” chief financial officer Arno Antlitz told analysts and journalists on a call Tuesday. He acknowledged, however, that the pace of EV sales growth in Europe and the United States had been slower than the German carmaker had originally anticipated.

EV penetration “will increase quarter-by-quarter, year-over-year, but not as fast as we have expected,” he said.

As for Volkswagen’s EV deliveries, they declined 16% in Europe in the first quarter compared with the same period in 2023. “All-electric deliveries in Europe were impacted by supply bottlenecks,” a company spokesperson told CNN. “There is a time gap between incoming orders and the delivery to the customer. The supply bottlenecks mentioned impacted the delivery performance in Q1.”

Meanwhile, in China, Volkswagen’s single largest market, EV deliveries almost doubled to 41,033 units from a “weak prior-year figure,” the company said in a statement.

The champion of German manufacturing is struggling to defend its share of the Chinese car market — the biggest in the world — where it has fallen behind Tesla and local EV producers such as BYD.

Volkswagen said its plans to significantly reduce battery and material costs would enable it to be cost-competitive with Chinese rivals by 2026. That should then allow it to reduce the price of its EVs in China, where fierce competition has led to intense price wars.

On EVs, “you see… a very challenging pricing environment” in China, Antlitz said. He added that Volkswagen would make “sound compromises” between “pricing and volume” in the country.

The carmaker plans to launch four new models in China over the next three years, two of which will be electric, while reducing time to market for new products and features by 30%.

“With these actions and our highly profitable combustion engine car business, we are well-prepared to continue to play a leading role in China,” Antlitz said.

Volkswagen is aiming to keep its market share in China roughly stable at 15% by the end of the decade, according to a presentation to investors.

The company’s profit plunged 20% to €4.6 billion ($4.9 billion) in the the first quarter, hurt by lower sales and higher costs.

“As expected, our first-quarter results show a slow start to the year,” Antlitz said in a statement. But he added: “We remain confident of achieving our financial targets for 2024.”

Volkswagen expects to pay out €900 million ($965 million) in severance costs to employees this year, as it slashes the size of its workforce as part of a €10 billion ($10.8 billion) cost-cutting program to boost efficiency.