The German market is becoming a magnet for manufacturers hoping to offload CO2 fleet-beating electric cars to remain CO2 compliant, thanks to both generous plug-in purchase incentives in Germany - driving the country to a dominating one-third share of the total West European BEV market during the first quarter of the year - and attractive fiscal benefits for drivers of plug-in company cars, boosting PHEV volumes by similar levels. Sweden, on the other hand, may be about to absorb some of that high voltage strain.
While the German vehicle market accounted for only one-fourth of total passenger car registrations throughout the 18 market regions in the first quarter, its xEV plug-in passenger car new registrations volume accounted for one-third (32%). Over the same time period, the real xEV penetration level in Germany (21.7%) was greater than the market average (16%). When it comes to new passenger car plug-in penetration, it is the largest non-nordic EU market.
Sweden (35.6%), Finland (25.9%), and Denmark (24.0%) all achieved greater xEV penetration levels, as did non-EU markets Norway (82%) and Iceland (51.5%), all of which are included in the EU fleet average objective. Sweden, which has been fueled by PHEVs up to now, helping its xEV volumes (Q1 2021: 32,388) surpass that of neighbouring Norway (29,789) this year, is expected to shift in favour of BEVs beginning in April thanks to a change to the Bonus Malus system that will reward BEVs with higher incentives while reducing PHEVs.
As a result, PHEVs had a late-March bump, accounting for slightly under every third passenger car and leading the 18 market region in both March and the quarter. BEVs will get SEK 70,000 (€6,900) starting in April, a SEK 10,000 increase. PHEVs will have a revised WLTP ceiling of 60g/km, down from 70g/km previously, and their bonus will be limited to SEK 45,000 (€4,400). As a result, it is projected that pent-up BEV demand will hit Swedish roads in April, while PHEVs will slow.
Meanwhile, in March, the UK reduced BEV purchase subsidies (max. GBP 2,500/€2,900) for vehicles with a maximum price of GBP 35,000, down from GBP 50,000 before, causing some manufacturers to decrease entry-level prices to within the new border within hours. The UK is in a critical year in which OEMs must satisfy independent CO2 targets, which is why, despite the subsidy drop, UK plug-in volumes are projected to stay strong this year. During the first quarter, the UK’s BEV volumes were second only to Germany and ahead of France.
Vehicle dimensions are also being influenced by EV purchasing subsidies. Demand for compact EVs is increasing as a result of German subsidies that favour smaller BEVs proportionally. VW’s eUp was the most popular BEV in Germany (Q1)