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Volkswagen electric car sales plunge as Europe returns to petrol

vw electric cars
Volkswagen's EV sales have also come under pressure from an influx of new China-made electric cars

Sales of Volkswagen electric cars have plunged by almost a quarter in Europe as demand for battery-powered vehicles stalls and buyers return to petrol.

Electric vehicle (EV) sales fell by 24pc in the first three months of the year as high inflation and rising energy prices dampened demand.

Globally, all-electric sales at the owner of Audi, Skoda and Porsche dropped by 3pc to 136,400, while sales of combustion engine cars climbed 4pc to nearly two million.

The drop-off in EV demand comes as politicians in the region rollback subsidies and reconsider ambitious targets to dump petrol and diesel cars.

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In September, Rishi Sunak, the Prime Minister, pushed back a deadline to block new petrol and diesel sales in the UK from 2030 to 2035. Incentives for drivers buying new EVs were scrapped in 2022.

Data suggests that demand for petrol cars is rising faster than for electric models in Britain.

EV registrations were only 3.8pc higher last month than they were a year earlier, according to figures released last week by the Society of Motor Manufacturers and Traders, while petrol-engine sales rose 9.2pc.

Volkswagen sells some of the UK’s most popular electric vehicle models, including the Audi e-Tron range and Volkswagen ID.

Officials in the EU, meanwhile, have been considering watering down a similar ban on petrol and diesel cars in the bloc to allow the use of synthetic fuels – so-called e-fuels – that can power a combustion engine.

Matthias Schmidt, founder of Schmidt Automotive Research, said Volkswagen had been impacted by the axing of subsidies for EV sales in Germany. The EU has also frozen emissions targets for vehicle fleets, stunting sales.

Mercedes-Benz on Wednesday also reported an 8pc drop in EV sales, blaming “the abrupt end of a tax incentive” in Germany and the phasing out of a popular electric model from its brand Smart.

Volkswagen’s EV sales are also coming under pressure as European carmakers face growing competition from an influx of new China-made electric cars. Brands such as BYD offer battery-powered cars at a cheaper price point that Western rivals.

The EU has launched an investigation into the subsidies being offered to Chinese carmakers by Beijing. Experts at Germany’s Kiel Institute estimate that BYD alone has received more than €3.4bn (£2.9bn) in Chinese subsidies in recent years, Bloomberg reported on Wednesday.

BYD was contacted for comment.

However, while electric car sales in Europe dropped sharply, they climbed by almost 91pc in China, Volkswagen said.

Hildegard Wortmann, a member of Volkswagen’s executive board, said: “Our diversified product portfolio gives us the necessary flexibility to compensate for fluctuations in demand in certain segments – as is currently the case with all-electric vehicles – in others.”

The drop in Volkswagen sales follows a sharp fall in deliveries at Tesla, the West’s leading electric vehicle maker. Last week, Elon Musk’s business reported an 8pc fall in sales during the March quarter.

Not all companies are struggling: BMW said on Wednesday that its EV sales rose by 28pc in the three months to March. Deliveries of its battery-powered models such as the i4, iX1 and i7 jumped 41pc during the period.

However, multiple carmakers have pushed back plans to launch new electric cars amid evidence that drivers’ enthusiasm for them is wavering.

Bentley, the British car manufacturer owned by Volkswagen, has delayed plans to launch its first electric vehicle until 2026.

Supercar brand Lamborghini, which is also owned by the German car giant, will not start selling an all-electric model until 2028.

Stellantis, the car giant that owns Peugeot, Vauxhall and Maserati among others, on Wednesday said it would extend production of its petrol powered Fiat Panda until 2030. The manufacturer had planned to switch its best-selling city car to all-electric by 2027.

Other car makers have rowed back on their expansion plans. Ford has delayed production of two new electric models, while Mercedes-Benz earlier this year dropped plans for its range to be all-electric by the end of 2030.