The use of electric vehicles has increased in recent years, as countries around the world work to reduce the environmental impact of transportation.
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Recent comments from Elon Musk about needs lots of oil and gas reflects broader concern that electric vehicle consumption will be hampered by rising electricity prices, according to the head of equity strategy at Saxo Bank.
Speaking to CNBC’s “Street Signs Europe” on Tuesday morning, Peter Garnry said automakers will face difficulties going forward.
“We see that for the next 12 months auto sales are coming from the US and Europe – they’re falling and they’re falling pretty sharply in Europe.”
Regarding electric vehicles, Garnry noted that while the segment is “still expanding, expanding rapidly,” there are also potential areas of concern.
“I don’t think it’s coincidental that you met Elon Musk in Stavanger, in Norway, talking about ‘please don’t stop generating any more nuclear power plants’, you know… ‘they We need oil and gas to make the transition clean, we need that bridge.'”
“And I think he’s very well aware that you can’t sell a lot of electric cars at sky-high electricity prices right now.”
“I mean, the cost advantage for EVs over petrol is dwindling rapidly in Europe and I really wonder if that’s going to start affecting sales of EVs in the UK. to what extent.”
Garnry’s comment mentions a The recent interview Musk gave at the 2022 ONS Conference in Norway, in which he gave his opinion on fossil fuels and the broader energy transition.
“Actually, I’m not someone who tends to, sort of, demonize oil and gas,” Musk said. “This is necessary now, otherwise civilization cannot function.”
“And… at this point, I think we really need more oil and gas, not less, but at the same time moving as fast as we can towards a sustainable energy economy,” said Director. CEO Tesla continued.
Musk, who also emphasized the importance of renewables such as hydro, solar, geothermal and wind, later described himself as “nuclear pro” and said that “we really should continue with nuclear plants.”
With European economies facing an energy crisis and soaring prices in the coming months, there have been concerns for several quarters that the rising cost of electric vehicle charging will reduce consumer attractiveness.
In the UK, at least, many discussions about the cost of charging an electric vehicle have taken place in recent weeks, especially after regulator Ofgem energy price ceiling increase.
The UK’s new Prime Minister, Liz Truss, is set to announce a support package to tackle the impending cost of living crisis, meaning the overall effect of Ofgem’s decision remains uncertain.
In the days following the announcement of the new price cap, a spokesperson for the RAC motor organization outlined the current operating situation.
“Despite the recent drop in gasoline prices [gasoline] and diesel, the cost of charging at home is still worth it compared to paying for either fuel, but again underscoring how rising electricity costs are affecting so many areas of people’s lives. like,” said Rod Dennis.
“We also know that public toll point operators have no choice but to raise their prices to reflect the rising wholesale costs they face, which will weigh heavily on motorists have no choice but to charge far from home.” Dennis added.
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On Monday, the Association of Engine Manufacturers and Traders said New registration for battery electric vehicles in the UK reached 10,006 in August 2022, an increase of 35.4% year-on-year.
However, SMMT notes that “growth in this segment is slowing, with a year-on-year increase of 48.8%.” In comparison, it says that “by the end of Q1, BEV registrations were up 101.9%.”
When it comes to the long-term outlook, Garnry of Saxo Bank warns that there will be bumps in the road.
“If you look from mid-2008 to the end of 2020, it’s a 12-year bull market for invisible-oriented industries – so software, healthcare, media and entertainment, etc. “
“Since the vaccine was announced in November 2020, we have seen the tangible world come back,” says Garnry. This includes car manufacturers and commodity companies.
“They sit in the physical world… and we think the next eight years will… mean a lot of positive wind.[s] for these tangible companies,” he added.
In the medium to long term, this should be a positive for automakers, “but unfortunately, there’s going to be a pretty bad adjustment period coming up for the industry,” he added.