What do Stellantis, Volkswagen and Mercedes-Benz have in common? All three car manufacturers have made a poor start to the year. But there are further similarities. Were supply chain disruptions or another external shocks responsible for the weak figures? No, it was apparently model changes that had an impact on costs and revenue.

Investors, however, show little understanding for this obvious excuse, and three stocks have been under downward pressure. Falling revenues and margins are not the only culprits. Slowly, the realisation is seeping through that the carmakers' positioning is not quite as future-proof as promised. Take Mercedes, for example. Sales of battery-electric cars fell by 8% in the first quarter, although they increased globally, and in all important world markets. Mercedes partly justifies the weak sales in the rapidly growing Chinese EV with the fact that the premium provider does not want to take part in the price war. But why is the margin eroding so sharply even without entering the price war?

The European car manufacturers may have been put on the wrong track by the local regulator. In any case, a recent study shows that the path towards e-mobility set out by the European Union is not leading to faster adaptation. According to a study by Kantar, just under 40% of respondents in Germany and the USA can imagine their next car being a battery-powered electric vehicle. In China, the proportion is twice as high. This is doubly bad news for Western car manufacturers. After all, their cost structure makes them uncompetitive in China. In the ageing societies of Europe and the USA, on the other hand, customer interest is barely growing. A dilemma that is hard to resolve. Manufacturers are caught in a strategic dilemma between the expectations of customers, investors and regulators. How they intend to free themselves from this dilemma remains a mystery. Investors' mistrust is therefore likely to persist in the long term —and continue to imply price/earnings ratios in the low to mid single-digit range. Model changes will not be able to fundamentally change this.