Electric car sales – including both battery electrics (BEVs) and plug-in hybrids (PHEVs) – now account for one in five auto sales in Western Europe, new figures reveal.
But while the transition to clean electric transport is hitting an “inflection point” of no return – as suggested by Tesla CEO Elon Musk on Monday (US time), it is clear that legacy carmakers will not cede profits from internal combustion engine (ICE) models until absolutely necessary.
First the good news. The European battery electric vehicle market is on target to total more than 1 million units in 2021, says auto analyst Matthias Schmidt.
The leading position in EV sales naturally went to Norway, with four in five new car sales in the first half of 2021 able to be plugged in. Iceland, Sweden, Finland and Germany followed with 45%, 40%, 28% and 23% of sales of the plug-in electric kind respectively.
On the battery-electric front, seven Western European countries – the above mentioned as well as Austria, Switzerland and the Netherlands all hit over double-digit figures for auto market share as battery-electric sales outdid PHEVs for this first time since late 2020.
But Schmidt warns that carmakers are in no hurry to transition until the second half of the decade.
As the European Commission considers a further tightening of fleet emissions limits, changing targets from 37.5% below 2020/2021 CO2 emissions levels to at least 55% less than current levels (100% has been touted but is unlikely according to Schmidt), he says that legacy carmakers will continue to eek out what profit they can from existing combustion engine models.
“With the net only likely to tighten more aggressively than previously announced from 2030 onwards, passenger car makers, trigger happy to present ambitious longer-term EV plans – partly to flirt with capital markets – in reality are likely to keep the EV brakes partially on until at least mid-decade (see forecast), while squeezing out profits from incumbent ICEs accounting for over 90% of current passenger car volumes,” writes Schmidt.
As he points out, Herbert Diess (CEO of Volkswagen Group, which has the largest share of the BEV market in Europe) has said as much.
Diess maintains that it will be profits from the sales of internal combustion engines that will fund the transition, saying at a recent presentation according to Schmidt, “Maintaining high cash flows from our ICE business to finance the transition will be paramount.”
Even though Volkswagen missed its 2020 target by 0.5gm/km of CO2 due to the delay of ID.3 deliveries and faced a fine of more than one million euros as a result, and has committed to a 2035 phase-out in Europe, there are still plenty of markets where polluting vehicles can be sold without penalties.
The upshot for countries such as Australia that have no vehicle emissions regulations will continue to be target markets for combustion models, as carmakers shunt electric sales to car markets with emissions limits to avoid fines.
It is this exact reason that carmakers like VW have been calling for similar limits in Australia, and why the Amarok sold in Australia comes from Argentina, built to a Euro 5 standard instead of the Euro 6 used in emissions-conscious Europe.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.