As the pandemic hit, automotive media’s conventional wisdom said it would send the EV revolution years backward. There were good reasons:
- The first nation to be hit, China, has also been the undisputed global leader in volume and breadth of EV production and deployment.
- China also introduced yet another round of incentive reduction (i.e., less subsidies for EV buyers), at the hinsighted poor timing of July 2019. So Covid-19 was a double whammy (triple, if one counts an already-slowing economy).
- The second nation to experience a major outbreak, South Korea, is an up-and-coming EV manufacturing power, with many Korean companies having production/assembly sites in… Wuhan.
- Then (excepting Iran), the next region to be hit hard, Europe, has been EV demand’s growth engine in the past couple of years.
- And not least… at some point in March once it became clear the entire world and its economy is about to go under Covid-19, the new-old trope of “EVs are expensive and people won’t have any money for them” has dominated expectations.
So… Covid-19 is still raging, particularly in the Americas but second waves are seen in Europe. Meanwhile, post-first-wave EV numbers are in:
- In July China moved back to the green with a modest year-over-year increase. Year-to-date the EV share is still down somewhat (4.8% vs. 5.5%), but there are now good reasons to expect 2020 will — amazingly — end with a net gain. More on China EV news, in a few weeks.
- Meanwhile, Europe ended the first half of 2020 with a record month. And year-over-year, European EV share has more than doubled over 2019! Nearly 8% (cumulative half-year sales of 400k EVs), vs. 3.6% in 2019. Given the news below, we might see the continent as a whole edge over 10% this year — a shocking development even without the Covid effect.
So… why is Europe’s pandemic EV effect the opposite of what pundits had expected?
- In 2020, new EU fleet emissions standards came into effect. According to Electrek they are equivalent to a CAFE of 57.4mpg. And they come with the teeth of a 95 Euro fine, per g/km exceedance, per vehicle sold. This means an immediate mandate for transition towards mass EV production.
- Surprising no one, in March Europe’s Big Auto lobby which fought these standards tooth and nail, tried to use Covid-19 as a pretext to roll them back. But they found a strong, determined front against them.
- One wild card in the regulators’ and pro-EV politicians’ deck, an unexpected gust of wind in their backs, was a well-known upside of the pandemic: residents of polluted cities (Europe is notorious for diesel vehicles) suddenly breathed fresh air for the first time in living memory. And they were not too stupid or brainwashed (like some in the US, alas) to realize that they can hang on to this clean air if they continue supporting the EV revolution. I don’t have a link here, but this has been described and reported widely.
- To be fair to regulators, automakers have had plenty of time to prepare, and the continent’s volume leaders — VW, Renault, Peugeot — (their lobbyists notwithstanding) were ready for 2020’s standards out of the gate and sharply increased both the volume and the breadth of their EV offerings.
Now, to Germany’s EV Green New Deal which went into effect July 1.
- €9k off for new BEVs up to €40k, and €7.5k for the €40-65k price range through 2021, plus possible additional state/local subsidies. That’s a 50% bump to the Federal subsidies. One-third of the sum is paid by automakers.
- €5k off for used BEVs that hadn’t received a domestic incentives earlier (so: mostly used imports from elsewhere in Europe?).
- PHEVs receive a generous 75% of these incentives.
- Exemption from a whole slew of motor vehicle taxes.
- Various charging-equipment subsidies.
- Additional perks in parking and HOV lane use.
Automaker-dominated states tried to greatly dilute this by adding a poisoned sugar pill in the form of a €3-4k incentive for relatively efficient ICE vehicles, and Merkel’s ruling CDU party was tempted to agree… but coalition partners SPD (the Social Democrats) held fast, citing the country’s official CO2 commitments — and so it didn’t make it in. Given ICE’s huge incumbency advantage, the above sugar pill though smaller than EV incentives, might have made all the above for naught.
So… how has this played out on the first month? How about, 36,000 EV sales in July and a 11% market share? Recall, Germany ended 2019 at a record 3% annual share. Front and center are two popular budget model: the Renault ZOE starting at €24k plus battery rental, and the aging VW eGolf starting around €25k. These are the prices before incentives.
The eGolf (EPA average range “only” 125 miles) was supposed to stop production over a year ago, to be replaced by the ID3, but delays in the latter plus ongoing demand surges have turned 2019 into the eGolf’s record year — and now 2020 might break it yet again. This is as if Ford would still offer its electric Focus, at a net price cheaper than ICE Focus, and sell many thousands of it every month (of course, Ford had always only hand-produced a couple hundred FFEs/month, before shutting it down completely).
This is how it’s done. And this is what we can do here, should we win in November.
