BrazilCrisis is accelerating Europe's transition to electrical driving
The corona crisis is appearing to accelerate the transition to electrical driving, according to a new analysis by PwC and Strategy&.
The firm’s quarterly analysis of the automotive sector shows that across Europe, sales of cars with conventional diesel and petrol-fuelled engines dropped by about 58 percent in the second quarter of the year. This significant reduction in sales naturally reflects the low appetite to invest in luxury goods such as cars, as European consumers tighten their belts amid an uncertain economic outlook.
However, at the same time, the sales of electric vehicles in Europe’s five largest markets (EU-5) increased by 26 percent in the first half of 2020 compared to the same period last year. The number of cars sold increased for all three electrical vehicle segments: fully electric and electrified vehicles, mild, full and plug-in hybrid as well as battery electric vehicles.
As it stands, electrical vehicles comprise nearly 17 percent of all new registrations in the EU-5. “The development of e-mobility shows that the transformation towards a strategically important segment of the market is – despite the crisis – even accelerating,” said Felix Kuhnert, a partner at PwC in Germany.
However, also considering sales in the powerhouse markets of US and China, only plug-in hybrid vehicles managed to grow their sales volume, exemplifying Europe’s frontrunning role in the green driving landscape. Notably, there are regional differences between member states, on the back of varying regulation, mobility habits, and willingness from consumers to embrace electrical driving.
While changing consumer preferences in favour of a better environment is driving most of European demand, governments are playing their role as well, said Kuhnert. In France, for example, buyers of battery electric vehicles can receive up to €12,000 in subsidy on a car’s purchase price, lowering the cost of purchase by up to 40% in some cases. In the Netherlands, buyers are entitled to a subsidy of €4,000 for such vehicles.
Germany introduced a raft of measures to stimulate the electrical driving market, including increased subsidies for battery electric vehicles and plug-in hybrid electric vehicles and reduced company car tax for electric vehicles.
According to Christoph Stürmer from PwC, “2020 could become a turning point for electric mobility in Europe.” In fact, if the current momentum continues into the third and fourth quarters, then Europe’s carmakers could even hope to meet the European Union's new vehicle emissions limits in 2020.
But, supply bottlenecks may spoil the party, warned Jörn Neuhausen, a director at Strategy&. With factories having been shut for an extensive period due to lockdown measures, there will be some delay before European production can satisfy the existing order backlog – while waiting for new demand. “There's a long delivery time, which is why the effects of government support for e-car sales may only be fully visible next year,” said Neuhausen.
Looking beyond 2020, the outlook for electrified vehicles is bright, say PwC’s and Strategy&’s experts. Based on current insights, they expect the number of units assembled globally to grow by a staggering 466% between now and 2027, with all segments touted for steep growth.
