Europe overtook China in 2020 to become the world’s largest market for electric vehicles, amid a pedal-to-metal push to adopt increased EV from governments and high consumer demand.
New electric vehicle registrations rose 1.33 million in key European markets last year, compared to 1.25 million in China, according to a report based on public data by an automated analyst. Matthias Schmidt.
The 18 markets include the states 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, according to Schmidt, which publishes the European Electric Car Report. It projects 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, and an increase of 572,000 from 2020.
Key trends have emerged as Europe races to become the most important segment for EVs, highlighted in the report that Schmidt shared with MarketWatch.
These include the Renault Zoe now the most popular electric vehicle in Europe, surpassing Tesla’s Model 3, which took the top spot in 2019. Indeed, Tesla’s success in Europe has declined in the board over the past year, with the U.S. company delivering 97,791 cars nationwide in 2020, down from 109,467 in 2019.
Here’s what you need to know:
SUVs are driving the growth
When you think of environmentally friendly vehicles, utility vehicles and crossovers may not come to mind. But this class is the most popular type of battery-powered electric vehicle in Europe, representing 27% of all registrations in 2020 and 29% in December alone.
Hyundai 005380,
and Kia 000270,
lead the pack, making up 39% of electric battery-powered SUV and crossover volume by 2020.
SUVs and transmissions are even more popular with hybrid buyers – making up 53% of the numbers of hybrid plug-in electric vehicles last year.
Customers prefer hybrid luxury
When it comes to hybrids, the best is the best. Premium brands accounted for 58% of plug-in hybrid electric vehicles in 2020.
Many of these cars were donated by German car giants: Volkswagen Group VOW,
with Audi and Porsche, owner of Mercedes-Benz Daimler DAI,
and BMW BMW,
A wave is coming from China
As Chinese carmakers increase efforts to meet market demand at home and abroad, they are looking to Europe.
The number of electric vehicles in Europe manufactured by Chinese companies grew 1290% from 2019 to 2020, to 23,800 units. Much of that movement came just recently – half of those cars arrived in the last three months of the year.
As Europeans scrambled to buy electric vehicles, a stream of cars from China also included Teslas. In December, 20% of Tesla TSLA,
models registered in Austria were made in China.
Read also: Audi bets luxury market in new electric vehicle venture by China’s oldest car maker
Government action is accelerating EV adoption
European carmakers are being pushed to make more electric vehicles with the threat of hundreds of millions of euros in fines from the European Union over binding emissions targets.
Introduced through 2020, and continuing into 2021, the nationwide average emissions target for new cars must be 95 grams of carbon dioxide per kilometer, which is about 4.1 liters of gasoline every 100 kilometers.
As a result of the post-Brexit trade deal, the UK government said the country’s carmakers are against emissions targets “at least as ambitious” as they are in the EU.
EV adoption is being pushed on all sides of the market, with governments stimulating demand by giving consumers a generous incentive to trade in their gas guzzlers.
In Germany, buyers can save up to € 9,000 ($ 10,940) on the purchase of new electric vehicles. France has offered incentives of up to € 7,000 in 2020, but that will cut to € 6,000 in 2021.
Management may hurt some baselines in the short term
Volkswagen Group confirmed last week that it had failed to meet EU emissions targets for 2020, leaving the company hooked for more than € 100 million in fines.
Others could be against the same race, although competitors were Daimler, BMW, Renault RNO,
and Peugeot (now part of Stellantis STLA,
) they all say they have met their targets.
“Despite very ambitious efforts in electrification, we have not been able to fully meet the set fleet target. But it’s clear that Volkswagen is well on its way, ”said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.
“The key to success is to give smaller, more efficient and affordable models more space in electricity distribution. ”
It is unclear how easy that will be in 2021. The COVID-19 pandemic has contributed to the lowest number of passenger car registrations in Europe since 1985 and, according to Schmidt, this has allowed several car manufacturers to achieve emissions targets.
Read also: Car manufacturers added the pedal to the metal on electric vehicles in 2020, with sales converging in one key segment where Tesla lost market share
Tesla loses leadership
Tesla comfortably launched the European EV charts in 2019. It delivered more than 109,000 vehicles that year, making up 31% of the region’s battery-powered electric vehicle market.
But the tide turned in 2020, with Tesla falling behind both the brands Volkswagen Group, which had a market share of 24%, and the Renault Alliance – Nissan – Mitsubishi, with a market share of 19%. Last year, Tesla delivered nearly 98,000 vehicles and accounted for just 13% of the European market.
According to Schmidt, it was the introduction of emissions targets, and a huge fine boom, that has accelerated the battle of European carmakers against Tesla for dominance.
See also: Electric car sales jump to record a 54% market share in Norway in 2020 but Tesla loses the lead
“With 2021 getting tougher – thanks to the year in coming to an end – Tesla will come under even tougher competition,” Schmidt said. “2025 will come when the targets come up again, Tesla will definitely be playing against a full-fledged opponent and it could be difficult for them.”
However, Schmidt notes in his market outlook for 2021 that the opening of a Tesla factory in Germany, which is expected to start in the second half, is likely to double regional sizes next year. .