Cars: hybrids advance over electric models – 03/22/2024 – Market

Automakers are instructing their suppliers to shift focus from electric models to hybrid vehicles as they grapple with “a sharp slowdown” in demand for battery-only cars, according to the head of parts maker Dowlais.

The company, formerly the automotive division of GKN, specializes in manufacturing side axles that fit both electric and combustion cars, providing around six months of supply visibility across all vehicle types.

There are “big changes” with a shift from electric vehicles to hybrid models, Dowlais chief executive Liam Butterworth said on Thursday, predicting that carmakers would be forced to reduce the prices of EVs this year.

“There’s a lot of replenishment going on in internal combustion engine platforms as automakers are moving away from EVs” in Western markets, he told the Financial Times.

“We have a pretty clear view of this year’s timelines,” he added, with “big shifts from one platform to another across automakers as they reallocate volumes” away from electric.

The move comes as EV sales growth has slowed, and in some cases fallen, around the world as drivers remain reluctant to pay higher prices for electric cars and have concerns about range and charging.

The speed of the slowdown caught several automakers by surprise, with groups like General Motors and VW pulling back on expanding EV capacity in recent months and diverting resources to models with engines, especially hybrids.

Carmakers are offering deep discounts on electric vehicles in the US, Germany and the UK to support their sales, industry data showed.

China has remained a strong market for electrics due to local rules and incentives, Butterworth said, but the U.S. has been disappointing and he doesn’t see “a lot of momentum.”

He added: “We see the big three (Ford, GM, Stellantis) pulling back on big investments in electric and going to hybrids.”

In Europe, the market remains linked to incentives, with “Germany falling in December [após cancelar incentivos]where we saw a complete drop in some EV platform schedules in the space of two to three weeks.”

Butterworth added: “Overall incentives by country are having a big effect in terms of consumers being willing to buy.”

He expected “more pricing and business incentives this year” as car manufacturers need to push sales to meet carbon targets or electric quotas in markets such as the UK.

His comments come as Dowlais, which spun off from GKN owner Melrose last April, reported a widening pre-tax loss from £62m in 2022 to £522m last year, after recording a write-down of 430 million pounds of its metal powders unit.

Butterworth said the company had “the right cost structure, the right portfolio of products and technology” and was being “cautious” about which new vehicles to supply.

Shares have fallen by a third since the spin-off, which Butterworth said is in part due to legacy Melrose shareholders selling their stakes in the new business.