Latest Editorial from the November 2022 European Electric Car Study:
Live streaming a fast-paced major sporting event while the neighbours next door tune in via a conventional TV connection can often cause a confused picture when screams of jubilation – or groans of anguish – are heard moments before it becomes clear what is happening. Booming electric car deliveries in the final months of 2022, leading to an almost 30% plug-in mix in November, could be feeding a similar narrative with a bitter 2023 hangover groan possibly around the corner. A challenging and bumpy anomaly-lined road lies ahead across Europe's famously heterogeneous market. Regional CO2 legislation and thick order books should be enough to fill some of those holes, though.
With plug-in car sales likely being brought forward into 2022 in the region's largest market Germany – accounting for just under 40% of the region's total plug-in new car registrations during November and achieving more than 100,000 combined BEV/PHEV units for the first time during a single month – the market is likely benefiting from a closing gate scenario rush to grab maximum full government BEV purchase subsidies.
Subsidies for BEVs will be reduced in 2023, while PHEV subsidies will be scrapped altogether. Meanwhile, Swedish and UK EV purchase subsidies, which were entirely removed during November and June, respectively, are likely experiencing a delivery lag boost before possibly stalling in 2023.
A 2023 change in the London ultra-low emission zone (ULEZ) expansion could still boost UK volumes, however.
The expansion, which includes affluent London boroughs, is likely to lead to an increased uptake in BEVs, particularly given the added prospect of car scrappage incentives.
A fiscal change in 'late to the EV party' Belgium will also see a shift towards favourable company car tax savings (benefit in kind) focus on BEVs from 2023 phased-in, which should boost BEV uptake as ICEs slowly become persona non grata.
Around six in ten new cars registered in Belgium can be accounted for by the company car market, according to industry association Febiac, which many employers use to circumnavigate high income tax rates by offering their employees company cars as a non-income tax based contribution.
Focussing on Germany, which kept Europe's electric car facilities turning in 2022 thanks to the maximum level of subsidies equating to €9,000, split €6,000 from the government and €3,000 from the manufacturer, 2023 could well begin with a sore head.
The generous government handouts led not only to a rise in the private uptake of BEVs, which accounts for roughly half of the total BEV market but also lowered the price for leasing deals, with the government handouts often being enough to cover the cost of the deposits.
This also resulted in novel business models where ex-lease models were resold to high acquisition tax neighbouring European nations, such as Denmark, as young-used vehicles, which avoided hefty purchase taxes there. Leasing rates for the Tesla Model 3 could be found for just €299 per month with no deposit required in some cases (SIXT).
Latest numbers from the KBA indicate that up to October 1, 2022 91,413 Tesla's were in circulation on German roads, despite 115,300 having been registered over the last decade, suggesting a large export rate.
If German new plug-in volumes do indeed catch a cold in 2023, that is expected to be reflected in reduced growth across the entire region.
We forecast a stable 2023 regional BEV market, with penetration set to be flat at 14.5% (see page 4). With EU policymakers still wielding their mighty CO2 fleet compliance sticks, OEMs can't afford to take their foot off the accelerator, with some likely to have to absorb the lost government contribution into their pricing next year.
In an email to potential German customers, Tesla already offered to fill the subsidy gap in 2023 if customers ordered by the end of 2022, indicating a possible hesitation in their own 2023 demand forecast.
Similar actions are likely to be replicated.
Jeep, Mazda and Ford, all exposed to PHEV volumes in meeting CO2 compliance, are all offering something similar for their PHEV models into 2023.
Key favourable company car plug-in tax rates, as well as bonus-maluses, will continue to add tonic to the market however.
Yet with BEV prices being less than stable and heading upwards, could an old resurrected relic from Toyota be positioned to steal some of the BEV thunder (page 17)?
2023 should see a stable, but no vintage EV year. Happy New Year!
More in-depth reporting in the full study published each month. The study now also features an in-depth look at the Chinese OEMs as their European expansion slowly begins. Are Chinese OEMs really a threat to the established European OEMs and what does the outlook look like?
May also interest you: European Electric Car Market Full Year 2021: Executive Summary – Full Year 2021 European Electric Car Study click here for the story
*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK