The European electric vehicle landscape

If you were to look solely at market valuations, you’d be forgiven for thinking electric vehicles were already the dominant force in car sales. Indeed Tesla’s $835bn enterprise value alone outstrips all of its internal combustion engine rivals combined, despite having just a fraction of the sales, profits or capital investment.

Yet the reality is more complex. Electric vehicles still make up a relatively small share of the market — just 3 per cent as of last summer, according to McKinsey — but that’s changing rapidly. There are dozens of electric vehicles due to be released over the next half-decade, with Volkswagen alone planning to sell 30 models by 2025. Government spending on related infrastructure is also accelerating, with President Biden Monday night announcing that he wants to replace the government fleet with electric vehicles, and create 1 million new jobs in related industries such as charging.

The acceleration to battery-powered vehicles — both pure electric and hybrid — is nowhere more evident than in Western Europe during 2020, if we’re going by some new analysis at Schmidt Automotive Research. So let’s take a quick look at some of the data from the year we all want to forget.

To start, one stat stands out above all: Western Europe is now the largest market for electric vehicles in the world, with sales of hybrid and plug-in vehicles outstripping China’s by 90,000 units in 2020, for a total of 1.33m cars sold. Within that aggregate figure, pure EV sales doubled year-on-year to 727,927 units, with hybrids making up the balance. And, to round things off, overall market share increased to 12.4 per cent.

While it’s tempting to put these impressive sales down to affordable new models such as VW’s ID3, Renault’s Zoe and Kia’s Niro, incentives also mattered. European legislation demanding that the average carbon dioxide output of new cars across a manufacturer’s fleet be reduced to 95 grammes of CO2 per kilometre took effect in 2020. Automakers had to act. By December, one in four cars sold was a plug-in vehicle, according to Schmidt.

So incentives work — who knew? But that’s not the really interesting part of this story. What’s more curious is which companies benefited, particularly in the electric vehicle space.

Here’s Schmidt’s breakdown of each manufacturer by their battery-powered-only (ie. not hybrid) sales over the year. See if you can spot the outlier (we split the chart in two, to make it easier):

Yep, that’s right, Tesla was the only automotive company to see its sales shrink — by 10.7 per cent to be precise — over the year. And this is in the fastest growing electric car market in the world.

Now, of course, there are mitigating circumstances. Here’s Schmidt’s explanation:

The Californian company was likely more impacted by COVID shipping and production disruption given its long distribution channels to Europe. In December, this report can confirm, Tesla models from China arrived in Europe with every fifth Model 3 registered in Austria being manufactured in China, according to Statistik Austria data.

There’s little doubt that Covid played a big part in both Tesla’s market share and volume loss in 2020. The question is, to what extent? In the Rosharch test that is Tesla’s stock, bulls will point to the new German factory and less trade disruption as factors that should mean normal service will resume in 2021, while bears will see it as a sign that competition is becoming a big problem for its world-domination narrative.

FT Alphaville has given up taking a view here, but we will say at a valuation of 14 times 2022’s sales, the Tesla uber-bulls better hope they’re right.

Related Links:
The EV Bubble spreadsheet: update uno — FT Alphaville