Hybrid & EV

Al Bedwell, Director, Global Powertrain

23 January 2019

Hybrid and Electric Vehicle Forecast

Update on Europe’s hybrid & EV car market

Sales of electrified passenger cars in Western Europe’s 17 markets totalled an impressive 900,000 units in 2018 with a growth rate of 27% YoY. Of these, 335,000 were plug-ins with 190,000 being battery electric vehicles (BEVs) and 150,000 being plug-in hybrid electric vehicles (PHEVs). As recently as 2017, PHEVs marginally outsold BEVs, but BEVs have now opened up a lead in the region’s plug-in sector.

Western Europe Electified car sales

This was not entirely due to a stellar year for BEV sales. In fact, some markets saw very little increase in BEV demand over the previous year (although others did better). A significant part of the reversal in position of the two types was that 2018 was a poor year for PHEV sales. We hinted at the headwinds likely to be faced by this technology in a 2018 LMCA blog and the modest 10% growth in PHEV demand last year bears witness to the tough market conditions being encountered. Delayed WLTP compliance, increased taxation due to worse CO2 ratings under WLTP and negative incentive changes are the underlying reasons behind the slowdown in the PHEV market. Of course, those selling BEVs faced none of those obstacles and as a result the YoY increase in sales was much better, at about 47%.

“As a share of total car sales, Norway continues to be in a league of its own”

Unsurprisingly, Norway led the way in BEV sales in 2018 with 45,000 registrations (one quarter of the entire region’s BEV demand), followed by Germany and then France. As a share of total car sales, Norway continues to be in a league of its own. 30% of cars sold there in 2018 were BEVs (45% in December!) while the Netherlands was next in line with a share of just 5%. Region-wide, the figure was a rather less exciting 1.3% but was a significant rise over the equivalent in 2017, which was 0.9%

The non plug-in sector was dominated by full hybrids with sales of 515,000 cars last year. This sector has been growing rapidly, adding 300,000 sales since 2015 and clearly a beneficiary of the region’s recent move away from diesel. It remains highly dominated by Japanese and Korean brands, with European OEMs resisting the temptation to compete head-on with the likes of Toyota and Hyundai/Kia. Instead, the European carmakers will focus their non plug-in efforts on MHEV systems, increasingly with 48V electrical architecture. We think about 60,000 cars fitted with such systems were sold in 2018 with German premium brands accounting for most of the volume. The more sophisticated versions of this technology, with electrical assistance of 20kW or more, offer most of the benefits of FHEV but with lower cost.

“it is the MHEV with 48V that may be the big winner in 2019”

In volume terms, it is the MHEV with 48V that may be the big winner in 2019 as more brands roll out vehicles fitted with this technology, standardizing it on several model ranges. As for the plug-in sector, new model introductions will help BEV sales to increase by 65% or more. Growth in the PHEV sector will be a little less impressive, but sales will get back on track after the WLTP hiccup. Our latest forecast, published at the end of 2018, indicates total electrified car sales in the region of 1.5mn, with BEV sales of 300,000 and rising quite fast thereafter. Helping to drive this growth will be an expanding public fast charger network in northern Europe, new zero emission vehicle (ZEV) incentives in several countries (including a bonus-malus scheme in Italy) and the arrival of several new BEV models, including Tesla’s Model 3.