European Automotive Newsletter - November
- Impact of the European energy prices on the automotive industry
- Industry focus –OEM sourcing strategies
- Transaction activity
- Quarterly update of financial KPIs
How the current energy crisis is likely to result in permanently higher energy costs
Managing the current crisis is essential for surviving, but understanding the lasting impacts is key for the longer term.
The ongoing global energy crisis since 2021 has been proven quite economically destructive due to its sheer price increase and the speed at which this has happened.
European natural gas price increased dramatically, reaching a peak of 34 USD per million Btu in August 2022. Electricity prices have risen sharply over the past year and reached the peak over 500
€/MWh2. The uncertainty about a potential gas shortage especially during the winter period comes on top of the pure price increase and affects individuals, companies and societies as a whole.
This lack of security in energy supply has shown European countries their vulnerability and is likely to result in an accelerated expansion of long-discussed renewable energy projects, investments in power grids and storage infrastructure to improve energy security and autonomy on a European level.
In the mid- to long-term this will lead to a drop in energy prices compared to the current peaks, but companies as well as individuals are well advised to base their decision making and capital allocation on the assumption that prices will remain significantly above the average pre-crisis levels.
