Europe BEV

Al Bedwell, Director, Global Powertrain

30 March 2021

Is Europe’s BEV market losing momentum?

100,000 pure-electric Passenger Cars were sold in the region in the first one-sixth of 2021, which is 9% of the volume we think will be needed to meet this year’s CO2 target, assuming other low-emission technology types, such as PHEV, sell as expected. The situation in 2020 after the first two months was that 11% of the year’s total had been sold. So, arguably, the sales rate is only a little worse than last year and, of course, our forecast of 1.15 million BEV sales this year may turn out to be wrong by a considerable margin.

On the plus side, we will see a steady increase of new BEV models being released this year and, in some markets, the boosted BEV incentives from last year will endure at least part way through the year. The UK has bucked this trend by cutting its grant to BEV buyers from £3,000 to £2,500 and lowering the maximum qualifying price cap, but Germany and France continue to offer strong inducements to those considering switching to a BEV.

For March, the UK BEV market will be quite critical – last year it accounted for almost a quarter of total European BEV sales in that month. Although the UK regulatory framework supports fleet and business sales well (they accounted for 70% of all UK BEV sales in 2020), the cut in the grant for private buyers is bound to have some impact. And will the sales profile this year match that of last year when 70% of sales took place in H2 under conditions enhanced by strongly boosted incentives in many major markets? Such a step change in the financial appeal of BEVs is unlikely to happen in 2021.

It seems very clear that sales were pulled from early 2021 into late 2020 and this has depressed demand so far. Can the same happen in late 2021, if cumulative sales to that time are not where they need to be for CO2 compliance? We are not sure that the conditions seen in late 2020 can be replicated this year. At the time, the Volkswagen ID.3 had been recently introduced and was building sales, Tesla was throwing everything at hitting its 500,000 global delivery target, and total regional BEV incentives were at the highest level ever seen.

Although it appears that most OEMs achieved or got close to their CO2 targets in 2020, 2021 may be a bigger challenge still. With every sale counting, no allowance for gas-guzzlers, less help from super credits and a BEV market that may not react in H2 the way it did in 2020, it is going to be tough for some.