(Bloomberg) -- Carmakers are faced with significant overcapacity to make EVs because of softening demand with many turning back to development plans for combustion-engine cars, according to French auto parts supplier OPmobility SE.
U.S., German and French carmakers are producing EVs at levels currently 40 to 45 per cent below initial expectations, “which means the capacity that had been put in place by our clients and by ourselves requires continuous adjustment,” OPmobility Chief Executive Officer Laurent Favre said. “We are adapting the way we work with our clients.”
Europe’s EV shift has faltered due to high prices and the removal of subsidies by a number of governments. The setback is prompting companies like Mercedes-Benz Group AG to push out EV sales targets while battery makers are reviewing projects.
The ripple effect from the slowing shift is spreading, with Stellantis NV halting EV output at its Mirafiori plant near Turin. Volkswagen AG this month started proceedings that may see it shut a factory in Belgium making the electric Audi Q8 e-tron. Another French auto supplier, Valeo SA, is seeking buyers for two plants.
In the U.S., Ford Motor Co. said last week it would invest US$3 billion to build its highly profitable Super Duty F-Series pickup truck at a plant in Ontario, shifting focus at the site after previously delaying plans for an electric sport utility vehicle.
“There also is renewed interest for hybrids and plug-in hybrids,” Favre said. “Some of our clients, notably in the U.S., had planned to shift directly from classic combustion engine vehicles to EVs and now they are focusing on plug-in hybrid development.”
OPmobility confirmed its full-year targets on Tuesday even though Favre said he remains “cautious” on the outlook for the rest of the year. The shares surged as much as 12 per cent, the steepest gain since March 2022 after reporting strong new orders, valuing the company at €1.5 billion (US$1.63 billion).
“There is still a lot of uncertainty on volumes and the market’s development,” he said. “The shift to electric was imposed by regulators, it didn’t come because of demand deriving from consumers.”
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