Carmakers Increase Petrol Vehicle Prices to Boost EV Sales
European carmakers are raising petrol vehicle prices as they scramble to encourage take-up of costly electric vehicles (EVs).
Vauxhall owner Stellantis, Volkswagen and Renault have all increased prices for petrol models by hundreds of euros in the last two months, as they prepare for tougher EU emissions targets in the new year.
In November, Stellantis raised prices in France of all of its Peugeot models by up to €500 (£413) – apart from fully electric ones.
Renault also increased prices on pure petrol models, for instance adding €300 to the price of a Clio SCE 65. But it kept prices of hybrid versions unchanged.
Peugeot described the new pricing as an “economic rise”, while Renault said the increase was normal over a car’s lifetime.
However, it is being viewed by analysts as an attempt to reduce demand for petrol cars and make EVs more attractive by comparison.
Beatrix Keim, of the Center for Automotive Research, said: “Carmakers have started with their pricing strategy to steer demand towards battery EVs in order to reach the CO2 targets and avoid potential fines.”
From Jan 1, the EU’s cap on automotive carbon dioxide emissions will require at least 20pc of all sales by car companies to be electric. However, at present only 13pc of sales are electric, according to the European Automobile Manufacturers’ Association, raising the risk of fines that could reach €15bn.
The tighter rules come as Europe’s car industry is grappling with the massive costs of shifting to electric, while manufacturers also face the threat of stiff competition from lower-priced Chinese brands.
At the same time, households have been battered by inflation and many countries have withdrawn subsidies for EV purchases.
In a sign of rising tensions, Carlos Tavares, Stellantis’s boss, abruptly resigned earlier this month following disagreements with the company’s board over how to deal with various problems.
European politicians are also facing calls to rethink the targets.
Petrol car price rises could help fund future discounts on EVs, said Denis Schemoul, auto analyst at S&P Global, acting as “an indirect subsidy” for electric car buyers by combustion engine buyers. But that was likely to hurt margins.
Carmakers’ attempts to raise prices could also backfire. A source close to one manufacturer warned that increasing the cost of petrol cars while market growth for EVs remains weak may end up generating poor sales in both categories, according to Reuters.
“In reality, increasing the price of thermal engine cars means cutting production and all the value chain and suppliers will suffer from this,” the source added.
