Car Sales In Europe Sped Ahead Last Month

Car Sales In Europe Sped Ahead Last Month
Reda Farran, CFA

8 months ago2 mins

Mentioned in story

What’s going on here?

May was smoother than a limousine for the European auto industry, with car sales speeding ahead.

What does this mean?

Nothing beats debuting a new ride in May, with the volume up, the windows down, and hayfever sneezes racking your body. That might be why car sales in Europe continued their upswing last month, rising for the tenth time in a row. Or maybe it had more to do with easing supply snags, which allowed carmakers to churn out even more vehicles. Either way, fears that the cost-of-living squeeze might make consumers cut back on big-ticket purchases seem to have been misplaced, with new car sales in Europe increasing by 18% in May from the same time last year. EVs led the charge with a 71% jump, boosted by government subsidies and juicy orders for corporate fleets.

Europe car sales
Source: Bloomberg

Why should I care?

Zooming in: Full throttle, empty pockets.

Tesla’s been making waves in the EV market, with European sales doubling in the first five months of the year. That’s mainly down to some aggressive price cuts – but there is a catch. See, while slashing prices boosted revenue by 24% last quarter, it also nibbled away at profit margins, dragging some profitability measures down to multi-year lows. And that’s got investors wondering if Elon Musk’s long-term game plan – prioritizing market share over short-term profit – will eventually pay dividends.

Tesla stock
Source: Google Finance

The bigger picture: Supercharger synergy.

There’s a silver lining for Tesla investors: EV newcomer Rivian plans to build Tesla’s EV charging ports into its future cars and tap into Tesla’s supercharger network of 12,000 fast-charging stations. That move follows Ford’s recent sharing-is-caring deal with Tesla, sparking a trend among North American EV makers and the companies that make charging tech. Those kinds of real-world, nuts-and-bolts charging considerations are key to broader EV adoption – and industry-wide standardization could make plug-in purchases a whole lot more tempting.

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