Volkswagen AG (VW) said surging energy prices have hurt electric-vehicle (EV) demand in Europe in recent months, although growth in the US is helping offset the slowdown.

EV sales in Europe are still rising but have "gone off track", Thomas Schmall, chief executive officer of VW's components division, said on Tuesday during a call with reporters.

The North American market is "speeding a little bit faster than we expected in the last months" as a result of incentives like the Inflation Reduction Act in the US, Schmall said. Demand in Europe is set to recover in the mid to long term.

Schmall appeared alongside VW CEO Oliver Blume during a media call announcing a joint venture on charging infrastructure in Italy with a subsidiary of Enel Group. VW and Enel X Way will each invest €100 million in Ewiva, which aims to build a high-power charging network of 3,000 stations by 2025.

EV affordability remains a key question as raw material and battery costs stay high, and consumers experience high electricity prices and inflation.

VW is looking into alternative battery chemistries that may offer less efficiency but lower cost in the face of rising prices for nickel and cobalt. Alternatives could come to market as soon as 2026, Schmall said.

"It means smaller batteries, because big batteries in small cars are high cost," Schmall said. "An average customer is driving 40 kilometres per day, so why do you need a 500-kilometre range?"

  - Bloomberg