The pandemic has been great for electric car sales

By Anna Cooban, CNN Business

Electric vehicles took a much larger share of the global auto market last year, as sales more than doubled despite turbulent economic conditions and a severe shortage of computer chips.

Global battery electric vehicle sales rose to 4.5 million last year from 2.1 million in 2020, according to data from consultancy LMC Automotive. Electric cars accounted for 6.3% of global vehicle sales in 2021, tripling their market share compared to 2019, before the coronavirus pandemic.

Overall passenger vehicle sales remain depressed, with just under 72 million dealer lots worldwide after the pandemic sparked a shortage of computer chips that forced many automakers to temporarily close factories. More than 80 million passenger vehicles were sold in 2019.

Al Bedwell, director of global powertrain at LMC Automotive, told CNN Business that the chip shortage “has kind of perversely helped” boost electric vehicle sales.

“Certainly, in Europe and certainly in China … very often it was the new generation of low-emission electric vehicles that took priority, because they were the ones that were needed,” he said. Consumers wanted to buy electric cars and automakers had to sell them to meet regulatory targets, he added.

“I think it was a great opportunity for the industry to focus on those,” Bedwell said.

carrot and stick

Governments have increased pressure on automakers to cut carbon emissions and shift production towards electric vehicles, sometimes with a carrot – by offering emissions credits for electric vehicles or paying charging stations. recharge – but also with a stick.

The European Union, for example, will fine car manufacturers if they fail to reduce the average annual emissions of their fleets by 15% by 2025, and up to 37.5% by 2030 by compared to 2021 levels. He wants to raise that figure to 55% under much more ambitious proposals passed last July.

From 2035, the bloc wants to impose an effective ban on the sale of vehicles running on fossil fuels.

Governments have also tried to entice consumers with subsidies and tax breaks. Last year, Germany extended a €9,000 ($10,000) premium for new electric vehicles to €40,000 ($45,000) for another four years. The country more than doubled its share of electric vehicle sales in 2021 to 14%.

Dan Ives, equity analyst at Wedbush Securities, told CNN Business that the subsidies have been a “clear tailwind” to boost electric car sales in Europe and China, estimating that they have “positively impacted about 15% of sales of electric vehicles over the past year”.

The last month of 2021 may have offered a glimpse into the future.

Electric vehicles snatched 10% global market share in December, according to data from LMC Automotive. In the same month, more electric vehicles were sold in Western Europe than diesel cars for the first time, according to data covering 18 markets compiled by Matthias Schmidt, publisher of the European Electric Car Market Intelligence Study.

December’s bumper numbers are likely a “distortion,” Bedwell said, and likely won’t be replicated in the early months of 2022. That’s because automakers have reportedly pushed to sell many electric cars over the past month. of the year in order to achieve CO2 reduction targets.

“It will be a few more years before we see these kinds of shares of electric vehicles across the region every year,” Bedwell added.

America still has a long way to go

The United States lags behind some other major economies.

While electric vehicles took the lead last year in Europe and China, taking 10% and 12% market share respectively, electric vehicles accounted for only 3% of sales in the United States.

Lower emissions targets, coupled with greater reluctance by US consumers to adopt electric vehicles, have put a considerable distance between the United States and its rivals. Increasing sales will require a change in mindset.

” You ask [consumers] adapt to anything else. It’s not only [that] they go to a different type of gas station,” Jessica Caldwell, executive news director at Edmunds, told CNN Business. “They have to plan their route, they have to figure out if they want to put a charger in their house.”

China is different, Caldwell said.

“There are a lot of first-time car owners…it’s not like they’re on their fifth, sixth, seventh vehicle and sticking to the same routine,” he said. she declared.

Ives said 2022 could mark a turning point for the United States as “Ford, GM, Rivian and others aggressively follow Tesla after the electric vehicle market.” He predicts that electric vehicle sales in the country will reach 10% of the market by 2025.

Tesla is “uncatchable”

Automakers around the world are investing tens of billions of dollars in the race for electric vehicles, with a slew of new models expected to hit the market in 2022.

Tesla’s Model 3 topped global electric vehicle sales in 2021, displacing about 540,000 units, according to LMC Automotive. The company, which briefly hit a $1 trillion valuation in October – one of only six US companies to do so – delivered a record 936,000 cars for the year, an 87% increase from to 2020.

Ives doesn’t expect Tesla or CEO Elon Musk to give up the crown anytime soon.

“The company has an iron grip on the global electric vehicle market and has the brand, capacity, battery technology and innovation under Musk that makes them nearly impossible to catch,” he said.

That doesn’t mean Tesla won’t have challengers. The Volkswagen Group delivered 453,000 electric vehicles in 2021, nearly double its 2020 figure. The owner of brands including Porsche, Audi and Skoda has pledged to spend more than $100 billion over the next five years to electrify its fleet. The group is already market leader in Europe.

Chinese automakers are also stepping up a gear. The Hong Guang Mini EV, the $4,400 pint-sized car made by a partnership between SAIC, GM and Wuling, topped sales in China last year and ranked second globally, according to data from LMC Automotive.

The road ahead

Electric cars still have a long way to go.

Sales of electric vehicles are expected to increase by 75% to more than 8 million in 2022, according to UBS forecasts.

Bedwell predicts that electric cars will account for more than 60% of vehicle sales in France, Germany and the UK by the end of the decade. China and the United States will lag behind by about 35%, he said. This means that there is still a lot to play for.

“I don’t feel like anyone is necessarily out of the game right now because it’s still pretty early days,” Caldwell said of the US market.

“It’s not like anyone has it in the bag.”

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