Return of the PHEV

Updated: Mar 3

Western Europe's BEV registrations took a breather in October, ending a 12-month consecutive run of above 50 percent monthly year-on-year growth according to the latest West European Electric Car Market Intelligence Report. October produced the slowest growth rate since September 2018, seeing the market increase by 32 percent. This slowing pace of growth was mirrored in the three other global markets monitored by this report. Combined October BEV passenger car registrations in Western Europe, China (includes LCVs), USA (Light-Trucks), and Japan fell by a third over the corresponding month last year (page 4), achieving 104,700 registrations in October, falling from 157,000 last year. Western Europe was the only one of those markets still growing.


European deliveries are starting to slow due to several reasons, led by the continued reduced supply of BEVs, aimed at shifting demand to 2020 in order to help reduce OEMs' CO2 fleet averages from that point – confirmed to this report by spokespersons from at least one major German OEM. Once the new EU CO2 fleet average targets commence next year (which begins with a phase-in period omitting the worst 5 percent of the fleet in 2020), supply is expected to return to the market, boosting volumes. The new models, available from 2020, are also likely delaying consumers' purchasing decisions.


A taxing issue

Contrastingly the UK, which will see a significant reduction in its so-called benefit-in-kind tax rate (the percent of the list price of the vehicle that has to be added to an annual taxable income) for drivers of company cars, will see a huge drop from the current 16 percent to zero from April 2020 for BEVs. This has resulted in the market increasing dramatically since this was confirmed in the summer, seeing the third highest growth rate in October behind minor markets Ireland and Greece respectively (page 5). It has resulted in company car drivers that are in the window to renew leasing deals opting for BEVs and PHEVs now (benefit in kind rate for PHEVs dropping to between 3-12 percent from 16 percent – depending on the EV ranges of vehicles currently on offer), in preparation of the cut from April 2020. A UK company car driver, that recently changed their vehicle to a BEV told this report that the reason they opted for an Audi etron BEV was largely driven by the new fiscal changes. They are happy to pay 200GBP more each month in leasing costs for a more premium vehicle – worth twice as much as their outgoing Toyota Prius – as the 2,000 GBP annual tax saving is subsidising this premium product.



In contrast, yet still acting as a booster for the region this year, The Netherlands, thanks to a rising benefit in kind tax rate for BEVs from January 2020 (increasing from 4 to 8 percent and rising to 22 percent for the value of the BEV over €45,000), is seeing volumes brought forward to this year. This can be witnessed most predominately when observing where Tesla's European distribution priority lies. Norwegian Tesla volumes have falling quarter-on-quarter since peaking during this year's opening quarter. Vehicles such as Tesla's Model 3 are most prone to Dutch tax changes. This has resulted in Dutch total BEV volumes almost equalling volumes seen in the much larger French market this year (pages 5 for data and 7 for trend).


The UK and Netherlands are likely to boost the region during the closing two months given the next shipment of Tesla Model 3 vehicles is due to arrive for an end of quarter push. However from 2020, Dutch deliveries are likely to flatten out in the first half of the year, while UK registrations are likely to continue their upward march – dependent on what kind of BREXIT deal is struck, and if OEMs are still open to prioritise the UK market with BEVs/PHEVs if they are not part of an EU fleet average calculation, although the UK has indicated in the case of a no deal they will mirror EU CO2 limits into its own legislation. Further increases in German purchase subsidies and a new drop in the monthly benefit in kind tax rate will undoubtedly boost the German market considerably next year also, leading it to take a commanding position as the region's largest BEV market, after just failing to achieve this so far this year, by a margin of under 100 units. Norway still remains far ahead when it comes to its BEV vehicle population however, breaking through the 0.25 million barrier in October (9% of all vehicles on the road) according to OFV data. Germany began the year with under 100,000 units (0.18% mix), KBA data.


Another significant occurrence was the comeback of the PHEV in October. Monthly regional PHEV registrations came to within just 1,000 units of equalling BEV volumes, thanks to the return of major models from BMW, Mercedes, and Porsche. It resulted in Porsche's year-to-date plug-in mix of its total sales rising above 10 percent during the opening 10-months. PHEVs are likely to play a significant role in meeting CO2 fleet average targets for OEMs keen to remain as profitable as possible. ◼ Full report available here:

© 2020 by Matthias Schmidt | Berlin, Germany