News announcing that the sale of cars with combustion engines (including hybrid ones) will be banned in the European Union is so common that no one doubts that the ban will take effect in 2035. In fact, In the EU, the big car manufacturers have already started to give up the diesel engine and some even announced that from 2035 they will no longer sell petrol or hybrid models.
As manufacturers align themselves with this trend, the actual bans become just a legislative formality. Obviously, the EU car market is facing a fundamental structural change and the effects will be felt much faster than we would be tempted to believe.
The purchase of a combustion engine car will become a luxury in Europe by 2028 at the latest. The economic explanation is simple and depends on the mix of regulations, the level of anti-pollution taxes and the investment required for a car purchase. So, in no more than seven years, for the vast majority of the inhabitants of the European Union, the purchase of a combustion engine car will not be economically viable. There are several reasons why investing in a combustion engine car will be a bad idea from an economic point of view.
First, as we approach 2035 the resale value of a combustion engine car decreases. If you analyze an asset purchase through its resale value, investments in cars are extremely unfavorable, compared to those in real estate, land, securities. From the moment you leave the car dealership, the value of the car decreases rapidly. This depreciation effect will accelerate as we approach 2035. In 2028 an individual wishing to purchase a new car to use for four or five years will be aware that in 2032 its resale value will be extremely low.
Second, as the market share of cars with combustion engines declines and electric vehicles become more affordable, we can expect successive increases in anti-pollution taxes. In 2028 these taxes are likely to be already consistent and the outlook is set to increase by 2035. The purchase of a combustion engine car in 2028 will become problematic if these taxes are too high. It is quite likely that in 2028 the use of an electric car will be significantly more cost-effective than one with a combustion engine.
Thirdly, there are already electric car models that are comparable in price and range to combustion vehicles. If investments in new storage technologies are confirmed, electric cars are expected to become more competitive than combustion cars by 2028.
Faced with a higher purchase price, anti-pollution taxes and a low resale value, customers will think twice before buying a combustion car. Green Europe will be here faster than planned.