Sluggish demand for electric vehicles in Europe may hinder efforts to meet 2030 targets, Citigroup analysts have warned.
As per the bank, EV’s are likely to make up just 18% of vehicles on the road in 2025, stretching to 40% in 2030.
“This means we think the industry will struggle to meet the 2030 CO2 emissions regulations,” Citi warned in a note.
Analysts had previously guided for battery EVs to make up 22% and 50% of the market by 2025 and 2030 respectively.
Legislation proposed in January had looked to set targets of a 55% reduction in carbon dioxide emissions by cars, alongside 50% for vans, by 2030, prior to an ultimate phase-out of emissions from new vehicles by 2035.
That said, Citi noted a lowering of interest rates by the European Central Bank in the coming months could prompt a recovery in the market.
For the likes of Volkswagen, this would provide further good news given Citi cited the stock as already undervalued.
“With most global assets trading at all-time highs once again, and with rate expectations falling in a resilient if not growing economic backdrop, it feels like some investors have been rotating away from very expensive global narratives back towards some value,” the bank said.
“As ever, Europe, Germany in Europe, and autos in Germany are the fourth derivative value trade.”