Europe surpassed China in 2020 to become the world’s largest market for electric vehicles, amid a pedal-to-metal push to increase EV adoption by governments and increased consumer demand.
The registrations of new electric vehicles last year were 1.33 million in major European markets, compared to 1.25 million in China, according to a report based on public data by car analysts. Matthias Schmidt.
The 18 markets include the European Union – minus 13 countries in Central and Eastern Europe – as well as the United Kingdom, Norway, Iceland and Switzerland.
According to Schmidt, who publishes the European Electric Car Report, the growth will only continue. He estimates that the share of electric vehicles in the European car market will increase from 12.4% in 2020 to 15.5% in 2021 – that is 1.91 million vehicles out of a total of 12.3 million, and an increase of 572,000 from 2020.
Significant trends emerged as Europe became the most important region for EVs, as highlighted in the report Schmidt shared with MarketWatch.
Among them is that the Renault Zoe is now the most popular electric vehicle in Europe, surpassing Tesla’s Model 3, which reached the top spot in 2019. Tesla’s success in Europe has declined across the board over the past year, with the US. company that will supply 97,791 cars across the continent in 2020, compared to 109,467 in 2019.
Here’s what you need to know:
SUVs lead the growth
When you think of environmentally friendly vehicles, sports vehicles and crossovers are unlikely to come to mind. But this class is by far 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,
led the package, which in 2020 accounted for 39% of battery-powered SUVs and crossover volumes.
SUVs and crossovers are even more popular among hybrid buyers, who last year accounted for 53% of built-in hybrid electric vehicle volumes.
Luxury buyers prefer hybrids
When it comes to hybrids, the best is the best. Excellent brands accounted for 58% of all plugged in hybrid electric vehicles by 2020.
Many of these cars were supplied by the German car giants: Volkswagen Group VOW,
owned by Audi and Porsche, Mercedes-Benz owner Daimler DAI,
and BMW BMW,
There’s a wave coming from China
As Chinese carmakers increase their efforts to meet domestic and foreign market demand, they are looking to Europe.
The amount of electric vehicles in Europe manufactured by Chinese enterprises grew by 1290% from 2019 to 2020 to 23,800 units. Much of the momentum has only come recently – half of the cars have arrived in the last three months of the year.
While Europeans scrambled to buy electric vehicles, the stream of cars from China also included Teslas. In December, 20% of all TESla TSLA,
models registered in Austria were manufactured in China.
Also read: Audi bets on luxury market in new electric vehicle business with China’s oldest carmaker
Government action speeds up the acceptance of EV
European carmakers are being forced to produce more electric vehicles by threatening hundreds of millions of euros in fines from the European Union over binding emission targets.
Under 2020 and continued until 2021, the average average emission target for new cars should be 95 grams of carbon dioxide per kilometer, which is about 4.1 liters of petrol per 100 kilometers.
In the wake of the post-Brexit trade agreement, the British government said the country’s carmakers were ‘at least as ambitious’ as the EU.
Acceptance of EV is being pushed on both sides of the market, and governments are stimulating demand by offering generous incentives to buyers to trade in their gases.
In Germany, buyers can save up to € 9,000 ($ 10,940) on purchases of new electric vehicles. France offered incentives to € 7,000 in 2020, but will reduce it to € 6,000 in 2021.
Regulation can hurt some of the bottom line in the short term
Volkswagen Group confirmed last week that it had not met the EU emissions targets for 2020, which means the company has fines of more than € 100 million.
Others may face the same fate, although competitors Daimler, BMW, Renault RNO,
and Peugeot (now part of Stellantis STLA,
) everyone says they have reached their targets.
“Despite very ambitious efforts to electrify, it was not possible to achieve the stated fleet target in full. But Volkswagen is clearly well on its way, ”said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.
“The key to success will be to give smaller, efficient and affordable models a greater role in implementing electrification.”
It is unclear how easy it will be in 2021. The COVID-19 pandemic has contributed to the fewest registrations of passenger cars in Europe since 1985, and according to Schmidt, it has enabled a number of car manufacturers to achieve the emissions targets.
Also read: Carmakers have put the pedal on the metal on electric vehicles in 2020, with sales rising in one key region where Tesla has lost market share
Tesla loses its dominance
Tesla was comfortably at the top of the European EV cards in 2019. He delivered more than 109,000 vehicles that year, accounting for 31% of the electric vehicle market for batteries.
But the tide turned in 2020, with Tesla lagging behind both the Volkswagen Group brand, which had 24% market share, and the Renault – Nissan – Mitsubishi Alliance, with 19% market share. Last year, Tesla delivered nearly 98,000 vehicles, accounting for just 13% of the European market.
According to Schmidt, it was the introduction of emission targets, and the fear of massive fines, that accelerated the battle of European carmakers against Tesla for dominance.
See also: Electric car sales reached a market share of 54% in Norway in 2020, but Tesla loses the best place
“With 2021 even more difficult – thanks to the phase-in at the end of the year – Tesla will come under even more competition,” Schmidt said. “Come 2025 when the targets increase again, Tesla will definitely play against fit opponents and will possibly struggle.”
However, Schmidt notes in his market outlook for 2021 that the opening of Tesla’s plant in Germany, which is expected to begin in the second half, is likely to double local volumes next year.