March 2025 was marked by significant political decisions, which increase - or at least don't decrease - the pressure on the ecosystem. The EU Commission unveiled its new EU Automotive Action Plan, which only gives limited additional wiggle room for OEMs, which they now need to manage responsibly to avoid even worse price effects down the line. The announced 25% import tariff by the US on all vehicle imports, will further pressurize OEMs in Europe (and the US...), which is reflected by a notable decline of 12% in the EuroStoxx Automotive Index this year. These geopolitical constraints do not prevent some players to continue disrupting the auto space, with BYD announcing a new ultra-fast charging system and high-capacity batteries. Even if this technical disruption will not be a game changer in the short-medium term, it has helped BYD to reach a record valuation of USD 162 billion—more than GM, Ford, and VW combined.
New EU fleet emission regulation - what is changing?
The EU Commission aims to support an accelerated transition toward zero-emission mobility in Europe. On March 4th, Ursula von der Leyen announced a new EU Action Plan, the result of a strategic dialogue with the European automotive ecosystem.
On March 5th, the EU Commission released a series of directives aimed at enhancing the competitiveness of the automotive industry while ensuring that Europe's climate protection goals are met. Among the key changes is an adjustment to the penalty rules for OEMs: from 2025 to 2027, compliance with fleet emission regulations will be assessed on an average basis over the three-year period, rather than annually. Additionally, a directive was introduced to boost demand for zero-emission vehicles from corporate fleets. The approximately €40 billion in annual subsidies for corporate fleets will be redirected to favor battery electric vehicles (BEVs) and reduce demand for internal combustion engine (ICE) vehicles.
A range of other measures was also announced, including support for local battery production, regulatory easing for autonomous vehicles, and accelerated expansion of the charging infrastructure network.
CVA perspective:
While some in the automotive industry may have hoped for a relaxation of regulations and a revival of profitable ICE sales, the EU Commission has made it unequivocally clear that it will not deviate from the direct path toward zero-emission mobility. Although the revised penalty scheme may offer short-term relief and provide traditional OEMs with the financial flexibility to invest further in the transition, it is equally clear that every BEV not sold in 2025 must be compensated by additional sales no later than 2027. The risk being of course that some players wait for 2027 to push BEV sales, causing much higher price discounts than would have been required under the original 2019 regulation. But now that the regulations-based boundary conditions are clearer, OEMs will need to model ICE, PHEV and BEV sales, margins and penalties over the coming years, including competitor moves (Tesla...) and upcoming tariffs (see below), taking into account own Model availability to cater for the mass market in the coming years. They better leave some space on their Excel open, as additional factors are sure to intervene in the sales scenarios in the coming years...
US import tariffs
Starting from 02.04.2025 the US will impose 25% import tariffs on vehicles and important vehicle parts when entering the US. While negotiations between the US and several countries are ongoing, the administration has made clear that it is serious.
The EU reaction is not yet official, but will likely include counter tariffs and potentially a taxation of US Big-tech. With already announced new / additional reciprocal tariffs which will be reveiled on the 2nd of April, all ingredients for a potential trade war and further de-globalization are on the table.
CVA perspective:
A trade war typically has no winners. On both sides of the atlantic, stock prices of OEMs have lost significant value and even companies with a high local production share (Tesla) have criticised the new tariffs. While import tariffs will primarily increase the price level in the US, they will also impact the European market. The EU has a trading surplus of ~0.8m vehicles which are primarily premium & luxury ICE vehicles for which a globally distributed production is economically less viable due to low volumes (e.g. Porsche; Mercedes S & G-Class). Due to CO2 fleet emission regulation the EU market can't absorb a potential supply surplus due to reduced exports to the US. We therefore expect a painful reduction in vehicle production in Europe, a further increasing under-utilization of factories and an additional drop in OEM margins.
BYD 5min ultra speed charging
On Monday, March 17th, BYD founder and CEO Wang Chuanfu presented a series of new vehicle models, including two high-end models (the Han L and Tang L) which will feature a new super e-platform.
With the new platform, a charging speed of up to 1 MW (1000 kW) can be achieved, enabling a range of 400 km to be recharged in just 5 minutes. At this rate, the new BEV models can be charged almost as quickly as refueling a conventional ICE vehicle.
CVA perspective:
The announced ultra-fast charging speed is not entirely new—it already exists in electric trucks from manufacturers like Daimler Trucks and Traton. However, integrating this technology into passenger vehicles signals a broader trend: BEVs are steadily approaching the convenience level of ICE vehicles. While ultra-fast charging has clear use cases, it will likely remain costly in the short to medium term, due to the need for upgrades to the electricity grid, buffer battery systems, and related infrastructure. We believe the more pressing barrier to widespread BEV adoption lies elsewhere: the lack of sufficient, low-cost, and user-friendly standard charging infrastructure—especially for households without access to home charging solutions.
Qorus-CVA mobility event
April 1st's webinar treated the topic of digitization and AI opportunities in the autofinance space. With our speakers from Direct Pojistovna, BMW Financial Services & CGI Finance we explored what the opportunity is for AI and to what extent it is already being leveraged in the industry.
Different use cases were shared: Chinese captive players using it for personalized marketing, streamlined claims decisions in insurance, predictive RV models & re-marketing steering, fraud and payment predictions,.... What is clear is there is a high number of AI use cases that can add value and streamline processes beyond historical data models. BMW FS showed their clear framework and governance that ensures AI goes beyond exploration and towards scalable results, whilst Direct Pojistovna already saw 60% FTE time benefits in their claims case. At the moment there is a split in the industry between those who are still coming to grips with AI and it's potential value (beyond ChatGPT!) and those who make it a systematic part of their IT & data strategy. Whilst it is not likely the make-or-break factor for players in the autofinance space yet, the potential impacts show that it is likely to have a material difference on operational efficiency and cost / price competitiveness for those who can leverage AI effectively.
