Analysis
7 Mar 19

US overtake EU in EV sales, and this is why

Transport & Environment unveiled a study on the EV market (both BEV and PHEV) looking at electric passenger car sales data from 2018. Their conclusions? On the one hand, the US have overtaken the EU in the number of EVs sold, despite the EU being more committed to climate action than the US. On the other hand, carmakers in the EU are holding back the uptake of EV sales in Europe.  

In 2018 there were more EVs (battery electric and plug-in hybrid) sold in the US than in the EU; approximately 361,000 units were shifted in America's 50 states, which is some 59,000 more than in the EU. A year before, the Old Continent was keener on EVs than their ally across the Atlantic. Especially in the fourth quarter of 2018 did EV sales take off in the US and surpass those in the European Union significantly. 

There is an important remark to be made though: the EU figures - of course - do not include Norwegian sales. If you add those, the 2018 European EV sales amount to 374,000 units.

Taking centre stage in the surging US electric vehicle sales was the Tesla Model 3, which became the best-selling US car by revenue. T&E shows that 68% of BEV (battery-electric vehicle) sales in the US were Tesla Model 3s. These sales were boosted by the California Zero Emission Vehicle programme and the federal tax credit for EVs - the latter came to an end in the case of the Model 3 in December 2018.

OEMs holding back massive EV push

The end of the federal tax credit and the availability of the Model 3 explain most of the American EV surge in Q4. But what else is at play? The situation is remarkable since the EU has set specific EV targets and incentives to obtain its climate change goals, while the US actually withdrew from the Paris Accords. 

What Transport & Environment underlines as an important cause of the lower EV sales numbers in Europe, is that the market does not rely on one major OEM like Tesla, but on many carmakers. As the European market is incentivised to reach environmental goals, T&E concludes in its study that EV sales in Europe are being suppressed in the run-up to the 2020/2021 CO2 emissions standard.

By 2020, carmakers in the EU need to be 95% compliant with the target of 95g CO2/km for new car sales, and fully compliant in 2021. However, they don’t have a target for the years before, leading T&E to conclude that carmakers lack the incentives to really boost (unprofitable) EV car sales at this point. 

Delays & diesel

T&E found evidence for its conclusion in the model launch delays and the long lead times. The Audi e-tron, for instance, was expected to be launched in 2018, but the first deliveries are only just taking place in the coming weeks. The Mercedes EQC will not meet demand in 2019 and probably won't until 2020. VW will only start production of the affordable ID Neo by the end of this year. PSA is unlikely to deliver high volumes of the Peugeot e-208 before 2020.

In addition, due to the new WLTP regulation, some PHEVs no longer complied with the new targets and were withdrawn from the market. Some of the most popular PHEV models have not been available for months in a row, such as the Volkswagen Golf GTE and Passat GTE, the BMW 220 xe Active Tourer and the BMW 330e. The Mercedes GLC350e still has to make its comeback. 

The limited model choice limits EV sales as well. The number of new EVs on the European market was 7 in 2018, and will rise to 20 in 2019, 33 in 2020 and 45 in 2021.Besides, carmakers spend close to nothing on EV marketing, and relied on dismissive and misinformative car dealerships while using pricing to steer buyers towards other more profitable models.

European carmakers also continued safeguarding diesel sales rather than pushing their EV models. T&E states that ‘This scaremongering is part of a wider strategy to postpone the transition away from diesel towards zero emission technology and protect diesel sales as recently admitted by Volkswagen CEO Herbert Diess in an interview with the Financial Times.’

Optimism

Despite this somewhat unfortunate attitude towards EVs, the European EV market reached a 2% share, led by Sweden (8%), the Netherlands (6.7%), Finland (4.7%) and Portugal. Moreover, T&E is optimistic about the market perspectives, since the diversity of models is widening and the share of BEVs in the total EV mix is increasing.

In the early 2020s, T&E even expects EV sales to jump ‘as carmakers will have to actively market and sell them to comply with the stricter regulations, such as the recently agreed 2025/30 CO2 standards, with a 15%/35% benchmark for zero and low emission vehicles sales in 2025 and 2030 respectively.’

In addition, the European EV market is more diverse than the US market. Combined with possible future efforts by EU carmakers to sell EVs and meet national and European targets, this might help the EU to once again sell more EVs than the US.

Authored by: Fien Van den steen
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