Slow and steady

Slow and Steady

Investors in Europe’s BEV market need to take a long-term view

Al Bedwell, Director, Global Powertrain

05 June 2018

European BEV Market

Investors in Europe’s BEV market need to take a long-term view

Electrified vehicle sales now represent around 6% of the European car market, but battery electric vehicles (BEVs) account for barely one-sixth of this total. Growth is steady but slow across the electrified sector, and particularly so in the plug-in sector – i.e. BEVs and plug-in hybrids (PHEVs). Ongoing post-EV incentive growth in Germany is really the only bright spot in BEV demand among Europe’s biggest markets so far this year, as highlighted in the chart below. Both France and the UK saw BEV demand fall slightly between January and April this year, compared with 2017. Spain and Italy, although growing, have yet to develop significant BEV markets at all.

European BEV Market

There may be some model-related reasons behind this pattern. An all-new version of Nissan’s LEAF became available in February and there is bound to have been some hold-off prior to its launch as buyers waited for the new version of this key BEV model. However, one would have expected the impact of those delayed purchases to have moved through the system and for demand in March and April to have been strong. So why are sales stagnating in many of the region’s big car markets, and why have BEVs failed to gain a foothold in others?

“BEV model availability is pretty poor to date”

Despite the arrival of the new LEAF, BEV model availability is pretty poor to date. Few new models have been added recently and those that are available, while refreshed and upgraded, are by no means in the first flush of youth. The situation will improve this year, but not in any significant way. Leaving aside the launch of a handful of exotic, niche electric hypercars, only two new models will hit the streets of Europe in 2018: Jaguar’s I-PACE and Audi’s e-tron. Meanwhile, the Tesla Model 3 and Mercedes-Benz EQ C are both due next year. None of these vehicles, the Model 3 included, will have low transaction prices and, while they will stimulate demand, they are unlikely to trigger a BEV gold rush.

Aggregate BEV model introductions in the 2018-2021 period, a few of which will be aimed at the mass market, will run well into double figures and will stimulate a mini-boom in demand. However, many will be highly priced Premium products, often crossovers or sports cars, and generally with relatively low-volume aspirations. Even by 2021, the production costs of BEVs and the infrastructure required to support their mass adoption will not yet have reached the point at which widespread ownership of this technology will be supported, with the exception of special cases like Norway and perhaps a smattering of other small northern European markets. We will need to wait a little longer for this to happen.

Our current estimate is that the tipping point lies somewhere around the middle of the next decade. There is sure to be more growth before then, but the move from niche to mainstream across the region will require more time.

Reaching that milestone will hinge upon the advent of the affordable BEV with a realistic range of 300 kilometres, a battery pack of circa 60 kW and a network of very high-powered charging stations to facilitate fast-range top-ups. It is in the offing, but not here yet …