Author: Guo Fangjie, special researcher of Longbridge Dolphin Investment Research
In late March, Tesla's Gigafactory in Europe, the Berlin factory, was finally officially put into operation, and even the German chancellor came out to help Tesla support the field.
And its formal production is basically equivalent to Tesla, the catfish that stirred up the Chinese market, and went to this European continent where traditional strong enemies are abundant, and came to a "Normandy landing".
In 2021, Tesla relied on China's production capacity + Model 3 to slightly inferior to Volkswagen Group in European new energy vehicle sales, ranking second. In 2022, the commissioning of Tesla's German gigafactory is bound to reshape the european new energy vehicle landscape.
This time, taking the commissioning of Tesla's European factory as an opportunity, Dolphin Jun's special researcher passed the following four questions:
First, as the largest new energy vehicle market outside of China, what is the current pattern and ecology of Europe?
Second, with all their might, how can European countries "artificially" increase the penetration rate of new energy?
Why can Volkswagen currently push Tesla in Europe?
Fourth, Tesla "Normandy" landed, can it really sweep the European market?
Take a look at the New Energy Vehicle Market Pattern in Europe in two parts, and the impact that Tesla may bring to the European market pattern when it is put into production.
This article focuses on the first two issues, and here are the specifics:
First, the European electric vehicle market environment: high penetration rate but closed
According to data released by the European Automobile Manufacturers Association (ACEA), in 2021, around 2.27 million electric vehicles will be sold in Europe, making it the world's largest market for electric vehicles outside of China, with an eviction penetration rate of about 19% in new European vehicles. For comparison, the penetration rate of electric vehicles in new cars in China will be about 15% in 2021, while the penetration rate of electric vehicles in the United States will be only about 4.4%.
European car companies' 2021 electric vehicle sales ranking:
Source: eu-evs
According to eu-evs statistics on eleven European countries (Norway, Germany, the United Kingdom, France, Ireland, Spain, the Netherlands, Sweden, Switzerland, Denmark, Finland), in 2021, Volkswagen beat Tesla to the top spot in the electric passenger car market with a small advantage.
Tesla is in second place, and French national treasure brand Renault cars slipped to third. Hyundai, Peugeot, Kia, Audi, Skoda, BMW and Mercedes-Benz ranked 4-10 respectively.
From the list of enterprise rankings, we can find that the pattern of the European electric vehicle market is: Tesla + traditional mainstream car companies. Compared with the other two major electric vehicle markets (the United States & China), the European market is considered to be the most closed and solidified: the big cake is divided up by the traditional European giants, and there are few new car manufacturers.
In contrast, China's car-making enterprises have the richest ecology, in addition to Tesla, traditional car companies, there are many new car-making forces: Weilai, Xiaopeng, Ideal (all three have completed listing, monthly delivery of nearly or more than 10,000 vehicles), Weima, zero run, Zhidou and so on.
Although the United States also takes Tesla + Detroit's big three as the main pattern, there are also new forces that have won the favor of the capital market:
In 2021, Lucid Motor, which specializes in luxury electric vehicles, and Rivian, which specializes in electric pickups, will be completed on the market. Market capitalization has soared since listing, with Rivian becoming the world's third-largest car company by market capitalization after the fifth day of listing. The author has two articles analyzing these two companies in detail:
According to the European Association of Automobile Manufacturers, more than 80% of Europe's car share in 2020 will be occupied by European car companies. In the United States, Japan's two fields and one production, South Korea's modern performance is very average.
Although there are new car manufacturers in the European market, such as ElectricBrands (the product is Xbus, electric pickup), fox e-mobility AG, etc., both the output and popularity are very limited.
Although the Penetration Rate of the Electric Vehicle Market in Europe is high, it is relatively conservative and closed.
Next, we drill down to the model rankings:
Source: eu-evs
According to eu-evs' statistics on eleven European countries (Norway, Germany, the United Kingdom, France, Ireland, Spain, the Netherlands, Sweden, Switzerland, Denmark, Finland), in 2021, Tesla's Model 3 is far ahead, with sales 1.87 times that of the second-place Renault Zoe, and the advantage is very obvious.
And this is also the result of Tesla's tariff pressure, insufficient production capacity, and long delivery cycle.
Renault's "old man" Zoe was once the hottest electric car in Europe, with sales of 99613 units in 2020 and sales in 2021, which is related to Volkswagen's launch of ID.3 to seize the market, as well as Renault's own overall strategy: Renault will use a new pure electric platform, Zoe will withdraw from the market around 2024, so it will not be upgraded again.
Volkswagen's ID series, the compact ID.3 and SUV ID.4 occupy three or four places respectively.
Among the models on the list, low-priced cars account for a large part:
In addition to Tesla, whether it is the Renault Zoe, or the Volkswagen ID.3, UP! Kia, Skoda, are compact cars, and the price is cheap, the highest is about 30,000 euros, almost 210,000 yuan. Tesla's Model 3 sells for as little as 39,000 euros, and the high-performance version sells for close to 60,000 euros.
Europe is obviously very strong in purchasing power, why are so many low-end models the most popular? This is mainly related to the use of scenarios: unlike Americans who like spacious and bright wide models, Europe due to dense buildings, narrow roads, small parking places, high fuel prices, the government also levies heavy taxes on high-energy vehicles, so European consumers prefer compact and practical, energy-saving and environmentally friendly, cost-effective vehicles. The proportion of mini cars is about 7-8% in Europe, while in the United States it is less than 0.5%, and China accounts for about 1% or so, and it is still declining.
Europe is wary of autonomous driving. Tech-driven self-driving solutions in Europe will face strict government scrutiny, and European consumers will fully accept electric vehicles with weak self-driving capabilities.
Therefore, compact, environmentally friendly electric, autonomous driving experience in general (software service capabilities in general) of the car such as the Volkswagen ID series in Europe is recognized by consumers.
Another feature of the European electric vehicle war is the rapid growth.
European electric vehicles were around 560,000 in 2019, 1.376 million in 2020 and 2.27 million in January 2022. It will increase by about 145.7% sequentially in 2021 and about 65% sequentially in 2022.
In contrast, overall passenger car sales in Europe fell by as much as 22% in 2020, the highest in the calendar year, and will continue to decline by 1.5% year-on-year in 2021.
Why has the European electric vehicle market been able to achieve rapid growth in the context of the shrinking and declining overall passenger car market? What efforts have the EU and governments made to boost the market?
Second, the European electric vehicle market is booming
1) Sword of Damocles – The EU's Strict Emissions Bill:
The European Union's near-stringent emissions laws are the first driver of the rapid development of the electric vehicle market.
Long before the Paris Climate Agreement was signed in the summer of 2013, the 27 EU member states at the time had already defined medium-term plans to significantly reduce vehicle emissions in the first half of the century.
In April 2019, the plan was officially implemented, and the European Commission set a target of reducing the average carbon emissions of vehicles across the EU by 37.5% by 2030. Specific to the passenger car field, it is actually a core indicator: 95 g/km.
That is, the average CO2 emissions per kilometer of passenger cars must not be higher than 95 grams, while light commercial vehicles must not exceed 147 grams.
If the testing of a new car does not meet the standard, one gram of CO2 emissions per kilometer exceeding the emission limit means a fine of 95 euros.
When this standard was announced in 2019, it can be called radical: almost no European car companies can meet the standards in 2020, according to the market research agency PA Consulting estimates on the same day, European car companies will pay a total of 14.5 billion euros in fines, and the three major German groups (Volkswagen, BMW, Daimler) will pay a total of more than 7 billion euros, of which Volkswagen will pay about 4.5 billion euros.
Although this strict standard has been modified a lot later, such as the first year of the implementation of the new regulations (2020), which can be excluded from the 5% of the car sales with the highest carbon emissions in the overall sales, and pure new energy vehicles can enjoy double super points, etc., in fact, it still stimulates these car companies with heavy historical burdens to sacrifice their lives to transform. European giants (Volkswagen, Renault, Stellantis, BMW, Daimler) have vigorously developed pure new energy vehicles.
2) Stimulus from European governments on the consumer side
The government stimulates the consumption of new energy vehicles, generally there are three main means: car purchase subsidies, reduce the cost of use, and build infrastructure.
a. Car purchase subsidy/tax exemption: subsidies for individuals or car companies according to different price ranges: The author summarizes the main subsidy policies of the four countries with the largest sales of new energy vehicles in Europe.
Source: Publicly available
Among these countries, Germany's subsidies are relatively generous and aggressive, with a maximum subsidy of 9,000 euros, and France and Italy are both capped at 6,000 euros.
The UK has cut subsidies in 2022 from £6,000 (for vans) to £5,000, and for passenger cars to be limited to under £32,000 (originally £35,000).
It can be seen that subsidies tend to low-cost cars, and there are basically upper limits on car prices, and the lower the car price, the greater the subsidy.
b. Reduce the cost of use: such as exempting the taxes and fees incurred by using the vehicle (road tax, emission tax, etc.), exempting public parking fees, and exempting tolls. The main policies of the major European countries are as follows:
Germany: 10 years of auto tax exemption for new energy vehicles
UK: Zero-carbon vehicles are exempt from car tax, first registration tax, and standard retention tax
France: Exemption from registration tax, corporate car tax
Italy: Exemption from owner tax, corporate car tax, free parking in urban areas in some cities, and free circulation in restricted circulation areas (ZTL areas).
How much of the cost of use has been reduced by these measures?
Taking Germany as an example, we calculate from deutsche Bank's report,"Government pays a lot to bring e-mobility forward":
For compact vehicles such as the Volkswagen ID.3 and Volkswagen Golf Life, the net price is around 30,000 euros, which equates to a reduction in the cost of ownership by at least 15,000 euros over the life of the car.
For mid-to-high-end vehicles such as the Audi E-Tron 50 quattro and SQ5, the net price is around 59,000 euros, reducing the cost of ownership by at least 20,000 euros.
c. Construction of public infrastructure such as public charging piles: ensure the availability of new energy vehicles. The current progress in the main European countries is as follows,
Source: ICCT report "Update on Eviction Ownership in European Cities"
Major European countries have built more than 20,000 charging piles, the Netherlands has about 300,000 new energy vehicles, but more than 65,000 public charging piles, ranking first in Europe.
By the way, Germany, europe's largest new energy car market, is a bit "crotch": according to the data of October 2021, compared with other european countries, Germany's electric vehicles have increased significantly, but the number of public charging piles has stagnated.
Moreover, German public charging piles are managed by different operators, which leads to different charging pile prices are not uniform, and even payment methods are different. Consumers need to carry multiple corresponding recharge cards to ensure that they can use public charging piles, which is quite inconvenient.
However, Germany has enacted an amendment to the Charging Pile Act in response to this: starting from July 1, 2023, charging pile operators must ensure that their charging piles can be paid with ordinary debit and credit cards to solve the dilemma of complicated payment procedures.
We can see that the EU and European countries are trying to use various means to stimulate new energy vehicles, but no matter how stimulating the regulatory level, it is fundamental to create usable new energy vehicles, and this depends on the top car companies that strive to transform.
This article about the introduction to the European new energy vehicle market is here for the time being, and the next part focuses on the peak showdown between Volkswagen and Tesla after the Berlin factory is put into operation.