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Sales of electric vehicles in Europe are growing at such a pace that the continent looks increasingly likely to outpace China in the near future.
That’s one of the findings of a report released Tuesday by London-based automotive research firm Jato Dynamics. However, it found that Europe and the US still have a few things to learn from China, the world’s biggest EV market, including prioritizing affordability, centralizing planning, and using data to better understand consumers.
Demand for cleaner and smarter cars is rising globally, particularly in Europe where the market has been bolstered by tighter emissions regulations along with an increasing awareness of climate change. EV sales in Europe in the first half exceeded China for the first time since 2015.
Although the coronavirus pandemic hurt all car sales, including EVs, which fell 15% globally in the second quarter, the market for electric vehicles is forecast to expand about 7% this year, led by Europe, according to a September report from BloombergNEF.
“What governments in underdeveloped EV markets now need is a more centralized plan to catalyze growth and create an optimal environment to build consumer confidence by making adoptions as simple as possible,” Jato’s report said.
Charging station:
Besides heavily subsidizing EVs, the government in China has created an effective infrastructure and implementation strategy that’s crucial to supporting adoption, the report found. According to the International Energy Agency, the number of public slow- and fast-charging spots reached 862,118 worldwide, with China taking a 60% share.
Tesla Inc., the California-based company that’s currently the world’s biggest EV maker, earlier this month cut the price of its China-made Model 3 sedan to 249,900 yuan ($36,800), cheaper than anywhere else, aided by supply chain localization, especially batteries.
While subsidies in China are being dialed back, EVs are still much cheaper than elsewhere. In Shanghai, it costs $13,000 for a license plate for a vehicle with a combustion engine whereas it’s free for an EV, thereby “creating a huge economic incentive and making the use of electric vehicles a no brainer,” Jato said. Automakers in Europe meanwhile have traditionally had a focus on luxury, more expensive EVs.
China isn’t the only country to offer EV subsidies, but it also spurred the domestic manufacturers by ensuring imported vehicles were for a long time not eligible for subsidies, and subject to import tariffs.
Beyond its home market, China aims to become a global automotive superpower and considers wider penetration of its own EVs as essential to that objective longer term.
“Despite sales data showing signs of an impending slowdown, once subsidies are fully phased out, the EV market in China will still be miles ahead of its competitors,” the report said. “Currently, there are 138 different EV models available in China, 60 in Europe and 17 in the U.S.”
It’s “apparent that a lighter touch approach is simply not as successful, as can be seen in the EU or U.S.”
Additionally, the use of data by Chinese firms including suppliers to the auto industry enables them to understand consumers better, and local buyers are very different to those in Europe.
“Chinese consumers are tech savvy, early adopters and keen to be at the forefront of digital development. A third believe it is critical to have in-car connectivity, compared to 18% of consumers in Germany,” the report said. “European consumers have typically been more hesitant when it comes to the adoption of electric vehicles, uncertain of EV capabilities and preferring to stick to what they know.”
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