Europe overtook China in 2020 to become the world’s largest electric vehicle market, amid accelerated pressure to increase government adoption of electric vehicles and overfed consumer demand.
New electric vehicle registrations exceeded 1.33 million in major European markets last year, compared with 1.25 million in China, according to a report based on public data from an automotive 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 United Kingdom, Norway, Iceland and Switzerland.
And growth will only continue, according to Schmidt, who publishes the European Electric Car Report. He projects 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 thousand as of 2020.
The main trends emerged as Europe rushed to become the most important region for EVs, highlighted in the report that Schmidt shared with MarketWatch.
Among them, the Renault Zoe is now Europe’s most popular electric vehicle, surpassing Tesla’s Model 3, which ranked first in 2019. In fact, Tesla’s success in Europe has declined over the past year, with the USA company delivering 97,791 cars across the continent in 2020, compared to 109,467 in 2019.
Here’s what you should know:
SUVs are leading the growth
When you think of environmentally friendly vehicles, sport utility vehicles and crossovers probably don’t come to mind. But this class is by far the most popular type of battery-powered electric vehicle 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-powered and crossover electric SUV volumes in 2020.
SUVs and crossovers are even more popular with hybrid buyers – accounting for 53% of plug-in hybrid electric vehicle volumes last year.
Luxury shoppers prefer hybrids
When it comes to hybrids, better is better. Premium brands accounted for 58% of all plug-in hybrid electric vehicles in 2020.
Many of these cars were supplied by the German automotive giants: Volkswagen Group VOW,
which owns Audi and Porsche, Mercedes-Benz owns Daimler DAI,
and BMW BMW,
There is a wave coming from China
As Chinese automakers step up efforts to meet domestic and foreign demand, they are looking to Europe.
The volume of electric vehicles in Europe manufactured by Chinese companies grew 1290% from 2019 to 2020, to 23,800 units. Much of that momentum came just recently – half of these cars arrived in the last three months of the year.
While Europeans struggled to buy electric vehicles, the flow of cars from China also included the Teslas. In December, 20% of all Tesla TSLA,
models registered in Austria were made in China.
Read too: Audi bets on the luxury market in a new electric vehicle venture with China’s oldest automaker
Government action is accelerating the adoption of EV
European auto manufacturers are being pressured to manufacture more electric vehicles with the threat of fines of hundreds of millions of euros from the European Union over mandatory emissions targets.
In phases until 2020 and continuing into 2021, the average fleet-wide emission target for new cars should be 95 grams of carbon dioxide per kilometer, which is about 4.1 liters of gasoline per 100 kilometers.
In the wake of the post-Brexit trade agreement, the UK government said the country’s carmakers face emissions targets “at least as ambitious” as those in the EU.
The adoption of EV is being pushed on both sides of the market, with governments stimulating demand by providing generous incentives for buyers to negotiate their gas drinkers.
In Germany, buyers can save up to € 9,000 ($ 10,940) when buying new electric vehicles. France offered incentives of up to € 7,000 in 2020, but will reduce that to € 6,000 in 2021.
Regulation may harm some financial results in the short term
The Volkswagen Group confirmed last week that it did not meet the EU’s emissions targets for 2020, which means that the company is about to receive more than € 100 million in fines.
Others may face the same fate, although rivals Daimler, BMW, Renault RNO,
and Peugeot (now part of the Stellantis STLA,
) everyone says they have achieved their goals.
“Despite the very ambitious efforts in electrification, it was not possible to fully meet the defined fleet target. But Volkswagen is clearly on the way, ”said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.
“The key to success will be to give smaller, more efficient and affordable models a greater role in the implementation of electrification.”
It is unclear how easy this 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 enabled several car manufacturers to meet their emissions targets.
Read too: Automakers stepped foot on electric vehicles in 2020, with sales growing in a key region where Tesla lost market share
Tesla is losing dominance
Tesla comfortably led the European EV charts in 2019. It delivered more than 109,000 vehicles that year, representing 31% of the region’s battery electric vehicle market.
But the tide changed in 2020, with Tesla falling behind both brands of the Volkswagen Group, which had 24% of the market, and the Renault Alliance – Nissan – Mitsubishi, with 19% of the market. Last year, Tesla delivered almost 98,000 vehicles and represented only 13% of the European market.
According to Schmidt, it was the introduction of emissions targets and the spectrum of massive fines that accelerated the battle for European automakers against Tesla for dominance.
See too: Electric car sales jump to record 54% market share in Norway in 2020, but Tesla loses first place
“With 2021 getting even more difficult – thanks to the end of the progressive year – Tesla will be under even more intense competition,” said Schmidt. “In 2025, when the goals increase again, Tesla will certainly be playing against fully prepared opponents and potentially have difficulties.”
However, Schmidt notes in his market forecast for 2021 that the opening of Tesla’s factory in Germany, with production scheduled to start in the second half of the year, is likely to double regional volumes next year.