Legacy OEMs Stalling in the Face of the EV Revolution
It’s been a tough year for European carmakers. Big names like Volkswagen, Stellantis, and BMW have issued profit warnings, while their share prices have fallen significantly. Aston Martin, often seen as a British icon, has also suffered, highlighting how no one is immune. Stellantis has been hit the hardest, with a dramatic 40% stock price drop since the start of 2024, leaving investors worried about the group’s strategy.
Across the Atlantic, even American giants like Ford aren’t immune, with shares down 14% year-to-date. The exception is General Motors (GM), but their rise is largely fuelled by stock buybacks rather than actual business growth.
Shareholder Pressure Over Investment in EVs
Lukas Neckermann, an expert in automotive strategy, believes that legacy manufacturers have entered a dangerous cycle. Many of these companies are funnelling profits into shareholder dividends and buybacks at the expense of investing in electric vehicle EV development, software integration, and autonomous driving technologies.
This tactic might appease investors in the short term, but it’s starving them of the capital needed to lead in the next era of the automotive industry. As a result, these manufacturers are at risk of losing global competitiveness, and the downward spiral becomes increasingly difficult to escape.
The message for the UK’s legacy carmakers is clear: investment in the future cannot wait. Continuing to prop up outdated petrol and diesel models only delays the inevitable.
Electric Vehicle Adoption Is the Only Way Forward
While the UK government’s push towards electric vehicles is clear, with initiatives like the Zero Emission Vehicle (ZEV) mandate, the industry itself is dragging its feet. What’s needed is not just compliance but proactive leadership.
Volvo is one example of a company trying its best. Despite a tough market for shares, their pivot towards electrification has driven sales back to pre-pandemic levels. Almost half of Volvo’s sales now come from plug-in hybrids (PHEVs) or fully electric models. Their all-electric compact SUV, the EX30, is set to become one of their best-sellers in record time. Volvo’s strategy may not have immediately saved its stock price, but it has provided them with a long-term roadmap that others should follow.
The UK and Europe: Electrification is Happening Faster Than Expected
It’s not just Volvo; the entire European market is seeing a major shift. In the last 15 months, EVs and hybrids have outsold petrol and diesel cars in Europe. The UK market, once sceptical, has been transformed as well, with EV sales surpassing diesel for the first time.
However, this trend isn’t just a European phenomenon. Even in the US, where EV adoption has been slower, the EV market crossed the 20% threshold this year, a significant leap from just 7% in 2020.
A Brave Step for UK Car Makers
UK manufacturers need to make a bold decision. Continuing to split resources between internal combustion engines (ICE) and electric vehicles is unsustainable. Instead, manufacturers should stop developing new petrol and diesel models altogether and focus their energy on electrified models.
There is a clear warning from markets like Norway, where petrol and diesel vehicles now account for a minuscule 1.4% of sales. The transition to electric isn’t just a future goal; it’s already happening. And it’s a trend that’s going to accelerate across Europe, including in the UK.
Embrace the Change or Risk Being Left Behind
The challenge in the UK is that car makers’ current strategies are underwhelming investors and failing to inspire confidence. Sticking to petrol and diesel models is a shrinking game. Manufacturers that continue to chase ICE vehicle sales will be caught out as demand for electric surges.
It’s time for the UK’s iconic car brands to tell a different story. By focusing solely on EVs and taking the leap to phase out petrol and diesel cars sooner, they can revitalise their brands and create a future-proof business model.
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John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.
