The coming economic slowdown will temporarily tame the mighty European electric car sales juggernaut but growth will only slow a bit before resuming upward momentum.
And when demand accelerates, an army of new Chinese battery-electric vehicles will be vying for attention, so watch out European manufacturers.
Meanwhile, internal combustion engine (ICE) sector sales are likely to slide, but as a prelude to a death spiral hastened by European Union (EU) governments which have banned the sale of new gasoline and diesel-powered cars and SUVs by 2035. Britain is an outlier, banning new ICE sales by 2030. But there’s a chance this might be rescinded as opposition gathers pace.
Before investors get too excited about the sales prospects for European electric vehicle leaders like Volkswagen and Mercedes, Chinese manufacturers are busily launching a wide range of new electric cars.
Great Wall Motors is about to start all-electric vehicles in Europe under the Ora brand. BYD has announced it will launch the Atto compact SUV (European NCAP awarded it maximum 5 stars for safety Wednesday), Tang large SUV and the big Han sedan. Perhaps surprisingly, these new products will attack the higher echelons of the European market. The Atto will be priced close to €40,000 ($39,000) and face down the likes of the VW ID.4 and Tesla Model Y. The Tang and Han will be priced at over €70,000. Other Chinese entrants include SAIC’s MG, established already thanks to a brand name that seems familiar but now Chinese-owned. It remains to be seen how unfamiliar names like Geely, NIO, Aiways, XPeng, and Hongqi fare against Audi, Mercedes, BMW, Porsche and VW.
Chinese auto imports carry a 10% tariff on sales in the EU, but because of their big manufacturing home base, these vehicles are still likely to be competitively priced. It remains to be seen how Europeans will react to these vehicles with unknown brand names at relatively high prices. Even the little Ora is priced close to €30,000. It might have been sensible to attack the lower end of the market, like MG.
Electric sales forecasts remain positive.
French auto consultancy Inovev expects battery-electric vehicle (BEV) sales in all of Europe will rise to 2.1 million next year from 1.7 million in 2022. Sales will rise steadily to 2.9 million in 2025 and on to 5.8 million in 2030, when BEV sales will account for 40% of total sales. ICE sales will still account for 50% in 2030 and plug-in hybrid electric vehicles (PHEV) the balance.
Schmidt Automotive Research (SAR) expects BEV sales growth to screech to a halt next year in Western Europe with market share staying at 14.5%, virtually the same as 2022’s. This after a market share of 2.5% in 2019, 6.7% in 2020, and 11.2% in 2021 when sales hit 1.2 million. Sales will advance to just under 1.5 million this year and just over 1.5 million in 2023. Western Europe includes all the big markets like Germany, Britain, France, Italy and Spain. All of Europe includes markets in central, southern and eastern Europe, where you’d be hard-pressed to find many BEV sales.
According to Inovev, BEV sales in Europe in the first half of 2022 were similar to the 2021 outcome, where the market share was 11.2% in western Europe and 2.3% in eastern Europe.
BEV sales will explode again after 2024, according to SAR, bringing market share to 20% by 2025 and 65% by 2030, which would mean sales of 9.2 million in a total market of 14.2 million.
SAR’s Matt Schmidt said BEV sales growth will slow because manufacturers marketing efforts are geared to the change in EU CO2 fleet average targets, and these are not too demanding again until 2025.
“The BEV mix isn’t expected to see any further inroads until 2025 when the next CO2 cut enters into force when we expect a 5.5 percentage point (market share) increase over 2022 levels to 20%. PHEV penetration is likely to be just 8% in 2025 compared with 9.6% in 2021,” Schmidt said in his latest monthly report.
The EU rules tighten again in 2027 and will drive sales on to 2030, Schmidt said.
These forecasts point to an underlying resilience to BEV sales in Europe, although they are driven by government regulation. It remains to be seen how they hold up against some extraordinary hurdles, and it’s not a very good time to launch new electric cars, or ICE ones either. The energy crisis might well lead to blackouts across Europe in 2023, curbing electric car use. Some countries could impose motorway speed limits of say 55 mph (88 km/h) to cut use of gasoline and diesel. That might rebound in favor of electric cars because at around 55 mph they are at their most economical.