H1 West European electric passenger car market

Mention the auto industry nowadays, and a relatively young-looking Californian electric car manufacturer will surely be heard. Present on the European market for a decade with a genuine own creation, the Model S (although it shared Mercedes parts thanks to its then shareholder) got the ball rolling. Retaining a quarterly West European BEV market share of above 10 per cent almost ever since, the rest is history. A significant peak was achieved during the third quarter of 2019 when its three model line-up at the time (S, X, 3) accounted for every third (33.9%) new pure EV entering the 18 market West European market. It was helped by the Model 3 launch during the same year and benefited from 2019 being the final year before the EU's CO2 fleet average compliance target was cut, seeing some OEMs sandbag BEV launches. However an ill-patent Q2 2022 saw headwinds for Tesla, dragging the entire June market down with it.

Matthias Schmidt

European Automotive Market Analyst @ Schmidt Automotive Research

Its quarterly share of the W-European BEV market fell to just 8%, while its exposure to the
Chinese market – hit by a regional covid-lockdown impacting both domestic deliveries and
exports (almost all European models were manufactured there this year) – dragged the entire regional BEV market downwards.

Total regional BEV volumes across the 18-market W-European region fell by 1.3% between April and June over the opening three-month period, while the total new car market rose slightly (+2.8%) during the same period, and even PHEVs saw a slight quarter-on-quarter rise (+1.5%).

The market’s BEV mix fell to 12.3% in Q2 – 0.5ppts below Q1.

While European manufacturers were impacted by the Ukrainian wire-harness issue in Q1,
which dragged into Q2 with a missing inventory hole from the Q4 CO2 push still unable to be filled, it led to broader production stoppages at plants, including BMW’s i4 plant in Munich and VW’s Zwickau BEV facility.

Tesla was unable to take advantage of this misfortune despite its German facility coming online in March. According to official Austrian data, every fourth Tesla delivered in the alpine country came from the German Grünheide facility during the past quarter.

The remaining vehicles came from China. Although the output from the plant just outside Berlin is slow, it potentially saved Tesla (and the BEV market) from further blushes.

While Tesla torpedoed the Q2 market, seeing its usual end-of-quarter boost turn to a whimper, Stellantis, which includes the Fiat FCA brands – part of the Tesla pool just over a year ago – saw its Fiat 500e model finish the second quarter as the region’s number one BEV model.

The combined brands, Peugeot/Citröen, DS, Opel/Vauxhall and Fiat, accumulated twice as
many BEV resignations (60,560) as Tesla (25,140). Stellantis narrowly failed to pass market leading VW Group’s total (67,760) during the same quarter.

Source: Schmidt Automotive Research

Mercedes-Benz Group, publishing its second-quarter results this week, said semiconductors “remain the main operational issue” going forward, while adding a long list of other macroeconomic potential headwinds.

However, the world’s second-largest car manufacturer VW Group – post management change – sounded more confident regarding semiconductors.

If the market returns faster in the second half of the year, BEV volumes will have to keep pace to offset CO2 emissions and help OEMs meet CO2 compliance levels.

While German CO2 data suggests VW is trailing somewhat when its comes to their CO2 fleet average, and with a below-average BEV mix of 10.5 per cent during the opening half in a market that saw 12.5% of the market accounted for by BEVs, the German’s are likely to double down on BEV deliveries in the second half of the year.

Their regional BEV order backlog increased to 0.35 million VW confirmed to this study following the Q2 analyst call.

Meanwhile the German government has agreed on phasing out purchase subsidies, according to the Ministry for Economics and Climate.

The end of purchase subsidies for vehicles that are not for private use will end outright September, 2023. This will unlikely impact the market in 2022 as most order books are full.

Retaining the benefit in kind reduced tax rates should also help maintain stimulation for plug-ins.

The total market BEV mix is still forecast to reach 14% by the end of this year, while it is currently hovering at a 12-month rolling rate of 13.7%, or 12.5% after 6 months this year.

With Tesla set to return with a bang in Q3, the 14% mix is likely all but “secured”.

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Matthias Schmidt

European Automotive Market Analyst @ Schmidt Automotive Research
Automotive Analyst with 15 years of experience serving the highest-ranking executives and decision-makers in and around the industry Member of @thefactory Berlin Automotive.

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