Europe overtook China in 2020 to become the world’s largest electric vehicle market, amid a pedal-to-metal push to increase government acceptance of electric cars and boost consumer demand .
New electric vehicle registrations last year stood at 1.33 million in major European markets, compared to 1.25 million in China, according to a report based on public data from an auto analyst. Matthias Schmidt.
The 18 markets include the countries of the European Union – minus 13 countries in Central and Eastern Europe – as well as the UK, Norway, Iceland and Switzerland.
And growth will only continue, says Schmidt, who publishes the European Electric Car Report. He predicts that the share of electric vehicles in the European car market will rise from 12.4% in 2020 to 15.5% in 2021 – that’s 1.91 million vehicles out of a total of 12.3 million, an increase of 572,000 from 2020.
Significant trends have emerged as Europe is racing to become the premier region for electric vehicles, highlighted in the report Schmidt shared with MarketWatch.
Among them, the Renault Zoe is now the most popular electric car in Europe, overtaking Tesla’s Model 3, which took first place in 2019. In fact, Tesla’s success in Europe has declined across the board over the past year, with the US. company that delivered 97,791 cars across the continent in 2020, up from 109,467 in 2019.
Here’s What You Need to Know:
SUVs are leading the growth
When you think of eco-friendly vehicles, you probably don’t think of SUVs and crossovers. But this class is by far the most popular battery-electric car type in Europe, accounting for 27% of all registrations in 2020 and 29% in December alone.
Hyundai 005380,
and Kia 000270,
led the pack, accounting for 39% of battery-electric SUVs and crossover volumes in 2020.
SUVs and crossovers are even more popular with hybrid car buyers – they accounted for 53% of plug-in hybrid electric vehicle volumes last year.
Luxury buyers prefer hybrids
When it comes to hybrids, better is best. Premium brands accounted for 58% of all plug-in hybrid electric vehicles in 2020.
Many of those cars were supplied by the German car giants: Volkswagen Group VOW,
who owns Audi and Porsche, Mercedes-Benz owner Daimler DAI,
and BMW BMW,
There is a wave coming from China
As Chinese automakers step up their efforts to meet market demand at home and abroad, they are looking to Europe.
The volume of electric vehicles made by Chinese companies in Europe grew by 1290% between 2019 and 2020 to 23,800 units. Much of that momentum only came recently – half of those cars arrived in the last three months of the year.
While Europeans rushed to buy electric vehicles, the flow of cars from China included Teslas. By December 20% of all Tesla TSLA,
models registered in Austria were manufactured in China.
Also read: Audi is betting on the luxury market in a new electric vehicle venture with China’s oldest automaker
Government measures accelerate EV adoption
European car manufacturers are being prompted to produce more electric vehicles due to the threat of hundreds of millions of euros in fines from the European Union for binding emissions targets.
Phased in through 2020 and continuing through 2021, the average emissions target for the new car fleet should be 95 grams of carbon dioxide per kilometer, which equates to approximately 4.1 liters of gasoline per 100 kilometers.
In the wake of the post-Brexit trade deal, the UK government said the country’s automakers should set emissions targets that are “at least as ambitious” as they are in the EU.
The adoption of electric vehicles is being pushed on both sides of the market, with governments driving demand by giving buyers generous incentives to trade in their gas eaters.
In Germany, buyers can save up to € 9,000 ($ 10,940) on the purchase of new electric vehicles. France offered incentives of up to € 7,000 in 2020, but will cut that to € 6,000 in 2021.
Regulations can damage some business results in the short term
Volkswagen Group confirmed last week that it had failed to meet the EU’s 2020 emissions targets, meaning the company is on the hook for more than € 100 million in fines.
Others could suffer the same fate, although rivals Daimler, BMW, Renault RNO,
and Peugeot (now part of Stellantis STLA,
) all say they have achieved their goals.
“Despite very ambitious efforts in the field of electrification, it has not been possible to fully achieve the set fleet targets. But Volkswagen is clearly on the right track, ”said Rebecca Harms, member of the independent Volkswagen Sustainability Council.
“The key to success will be to give smaller, efficient and affordable models a bigger role in the rollout of electrification.”
It is unclear how easy that will be in 2021. The COVID-19 pandemic contributed to the fewest passenger car registrations in Europe since 1985 and, according to Schmidt, allowed a number of car manufacturers to meet emissions targets.
Also read: Auto makers kicked the metal from electric vehicles in 2020, with sales surging in a key region where Tesla lost market share
Tesla loses dominance
Tesla easily topped the European EV charts in 2019. It delivered more than 109,000 vehicles that year, accounting for 31% of the region’s battery-powered electric vehicle market.
But the tide turned in 2020, with Tesla behind both the Volkswagen Group brands, which had a 24% market share, and the Renault-Nissan-Mitsubishi Alliance, with a 19% market share. Last year, Tesla delivered nearly 98,000 vehicles and represented only 13% of the European market.
According to Schmidt, it was the introduction of emissions targets and the specter of huge fines that accelerated European automakers’ struggles against Tesla for dominance.
Also see: Electric car sales soar to record 54% market share in Norway in 2020, but Tesla loses top spot
“As 2021 gets even tougher – thanks to the phased year-end close – Tesla will face even more intense competition,” Schmidt said. “In 2025, when the goals go up again, Tesla will certainly play and potentially struggle against fully fit opponents.”
However, Schmidt notes in his market outlook for 2021 that the opening of Tesla’s factory in Germany, which is expected to start production in the second half of production, is likely to double regional volumes next year.