How the car market is racing in Europe. Wall Street Journal Report
What happens to the electric car market in Europe. Facts, numbers, comments and scenarios in the Wall Street Journal in-depth
Europe is buying electric vehicles at a record pace and has overtaken China as the largest EV market in the world as consumers are encouraged by government subsidies and dozens of new cars. The continent's share of global sales of new electric cars nearly doubled to 43% last year, while China and the United States lost market share – writes the WSJ .
But the surge in Europe relies heavily on government incentives deployed during the pandemic, and analysts warn that momentum could be reversed if and when that support wanes. Most government subsidies for electric vehicles are limited in scope and will expire by the end of this year.
“The market is extremely sensitive to government and corporate discounts,” said Arndt Ellinghorst, an auto analyst at Bernstein Research. "Once the subsidies are removed, EV sales will drop by 30-40% for at least one or two quarters."
Without the subsidies, EVs are still considerably more expensive than equivalent combustion engine vehicles. That probably won't change until the end of this decade, analysts say, when battery prices drop due to new technology, greater economy of scale, and competition.
The European approach started with more sticks than carrots. The European Union, in particular, has consistently tightened emissions requirements, prompting the industry to launch more electric and hybrid cars, or face hefty fines.
As the pandemic hit, governments seeking to cushion the economic shock began directing aid to industries at the forefront of the battle against climate change. A large part of this assistance has gone into incentives for consumers to buy EVs, creating a surge in demand.
The moves changed the perception among industry leaders that there was no market to justify the huge investments needed to build electric cars.
“We have an incentive to build these cars… It helps make the EV very attractive to the consumer,” said Hakan Samuelsson, CEO of Volvo Cars, the Swedish carmaker owned by China's Zhejiang Geely Holding Group. "But in the long run, these incentives and tax breaks are not sustainable."
Car manufacturers started rolling out new models in earnest last year. Volkswagen AG, the largest car manufacturer in Europe, presented its ID.3 and ID.4 models. Premium car makers like BMW AG, Mercedes and Audi have launched high-end EVs. This year, Mercedes is set to launch the EQS, which will be an electric and highly automated successor to the S-Class flagship.
About 65 new EV models were launched in Europe last year – double that in China – and another 99 are expected to hit the market this year. That compares with 15 launches in North America last year and an expected 64 this year.
Manufacturers say the incentives and the explosion in the number of new EV models have come together at the right time, exciting both supply and demand.
“You have to have the right product on offer… This is what we saw in Europe last year,” said Britta Seeger, Daimler AG board member responsible for global sales. "The offer is better, and the bonuses are driving sales."
The availability of EVs with familiar brands is also driving sales. Hallgeir Langeland, a 65-year-old Norwegian environmentalist and former politician, hasn't owned a car in 25 years, but when Ford Motor Co. launched an all-electric version of its Mustang last year, he didn't think twice.
“I had to have it,” he said, recalling the Mustang he drove in his youth. Now he is looking forward to March. “It's cherry red”.
The purchase was facilitated by subsidies that made Norway the largest per capita EV market in the world, prompting an ironic General Motors Super Bowl commercial starring Will Ferrell, who called on American consumers to buy electric and beat Norway. .
Christian Burg, who runs a company that builds energy-efficient homes in Germany, had been driving a diesel BMW X3 SUV for years. When the government increased subsidies for electric cars last summer, it applied for a small business grant and switched to the new iX3 plug-in hybrid version of the car.
"We received € 3,750 in cash incentives," he said.
Sales of plug-in electric vehicles in Europe increased 137% to 1.4 million vehicles last year, outpacing China, which recorded a 12% increase to 1.3 million, and the United States, where Sales increased 4% to 328,000, according to ev-volumes.com, a research group.
The state of the European market recalls the trajectory of electric vehicles in China years ago. Determined to skip Western markets, Beijing provided heavy subsidies for purchases and required manufacturers to ensure that a certain percentage of new cars produced each year were electric.
The effort helped spawn hundreds of startups and increased EV's share to more than 8% of new car sales by mid-2019. Then Beijing cut incentives in June 2019 and sales plummeted, with the share of EV which fell below 5% by the end of the year. When the pandemic hit, China's EV sales plummeted further, raising doubts about Beijing's ability to meet its target of having them account for 20% of new car sales by 2025.
Beijing reinstated EV subsidies early last year, but cut them again in January in a renewed effort to wean consumers.
In Europe, national governments are reconsidering plans to phase out the current EV grant scheme at the end of the year. Analysts suggest governments in countries that produce a lot of cars, such as Germany and France, could extend aid beyond this year.
While most industry leaders welcome government efforts to kick-start markets for new technologies such as electric vehicles, auto makers worry that subsidies will only have a short-term impact and no broader structural changes. they will not create a self-sufficient market.
Instead, they urge governments to focus more on developing infrastructure such as charging stations, providing support for building battery plants and taxing carbon dioxide emissions.
Article taken from the foreign press review of Eprcomunicazione
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/come-sfreccia-il-mercato-delle-auto-in-europa-report-wall-street-journal/ on Sun, 07 Mar 2021 05:35:17 +0000.