How the Ukraine crisis could scupper Germany's EV targets

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The Russian invasion of Ukraine could prevent Germany from meeting its target of 15 million electric vehicles (EV) on the roads by 2030 says market analyst GlobalData.

Germany, like most countries, has a plan for cutting its greenhouse gas emissions with a 2045 target for net-zero. Increasing the number of EVs on the roads was an important element for how the country was to achieve this target. 

According to Global Data, the crisis in Ukraine has led to an 18% rise in the price of Nickel - a key element in EV batteries - since the end of 2021 to over $24,000 (€21,800) per metric tonne. As a result, Germany could see stunted growth for EVs in the coming years.

Read more: Germany to double EV subsidies as VW launches car

Figures from the German Environment Agency, Umweltbundesamt (UBA), show the country's transportation sector accounts for 20% of total emissions.

Two of the major driving factors for EV adoption have been the central government subsidy and the battery prices. With battery prices set to increase and uncertainty on the central subsidy level from 2025, Germany may not be able to meet its EV target.

Mohit Prasad, Practice Head of Power at GlobalData, said: "Russia is the world’s third-largest nickel producer. Nickel is a significant ingredient that is used in lithium-ion battery manufacturing. Batteries are the most important component of the electric vehicle. The Ukraine-Russia crisis has led to the highest increase of nickel prices in a decade."

Automakers in Germany have already been affected by the crisis. Volkswagen, which had sold over 20% of the country’s EV sales in 2021, has suspended production at two factories in eastern Germany because the crisis has interrupted deliveries of critical components from western Ukraine.

GlobalData warns that if this continues, other manufacturers could also potentially suspend their operations.

Read more: How close is Germany to its climate goals?

"Germany has set an interim target of 48.1% reduction in greenhouse gas emissions coming from the transport sector from the 1990 level by 2030. The growth of the electric vehicle market is important for this. The country has already crossed one million electric cars on the roads. Half of these are Battery Electric Vehicles and the remaining are Plug-in Hybrid Electric Vehicles. To reach its 15 million target only for EVs by 2030, the market should grow at a CAGR of 35%," Prasat added.

"Considering the issues and delays related to the procurement of raw materials, which would be further amplified with the Ukraine-Russia crisis, the country could expect a muted growth in the EV sector. This might dent the country’s preliminary target to reduce greenhouse gas emissions coming from the transport sector by 2030."

Nickel is not the only commodity necessary for car production that is set to be hit by the war. According to a report in The FT earlier this week, Ukraine supplies around 50% of the world's neon gas, an essential part of semiconductor production. 

Automakers have already been suffering from a year-long shortage in semiconductors, and the Russian invasion looks set to further compound this problem.

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