On Global EV Sales - Numbers and Potential Consequences
By Gary S. Vasilash
Transportation Editor, Gardner Business Media
The distribution of EVs and potential implications, why lean still matters even with supply chain issues, where there are the most industrial robots, a potential coming shortage that isn’t a microprocessor, mapping tech and obscured signs, and a look at the future The International Energy Agency reported that in 2020 Germans registered 395,000 electrified vehicles. 185,000 in France. And 176,000 in the U.K.
Or a total of 756,000.
Meanwhile, in the U.S., the number was 295,000.
To put this into context:
The populations of Germany, France and the UK are, respectively:
- 83 million
- 67 million
- 67 million
Or a total:
- 217 million
The population of the U.S.:
- 329 million
So as you can see, the density of electrified vehicles per capita is, well, a whole lot more dense in those European countries.
Announcements by GM and Ford indicate that they are going to work to catch up fast.
If one can speculate that Europe might be ahead of the curve that the U.S. will essentially follow, then speculative analysis from French firm Inovev regarding the transition to electrified vehicles is worth considering.
The firm created a forecast model to simulate what might occur in Europe by 2030.
It looked at factors including legislation for CO2 objectives and probable market demand.
Two scenarios emerged:
- To meet the regulations, OEMs would need to sell at least 40% full battery electric vehicles (BEVs) and 10% plug-in hybrid vehicles (PHEVs)
- 30% BEVs and 25% PHEVs would do it, too
Inovev’s reference scenario has it that the combined sales of BEVs and PHEVs in Europe might be 35% (25% BEVs and 10% PHEVs).
Which could be problematic to the OEMs because it wouldn’t reach the target.
But Inovev discovered something else that could prove to be difficult for the OEMs:
The firm points out that OEMs are showing a tendency producing larger, more functionally complex vehicles. That’s because they tend to be more profitable.
This means small vehicles are not being offered as had been the case.
Two consequences. Neither particularly good:
This could lead to two consequences:
- Vehicle prices will rise to the point where there is diminished affordability. The overall new vehicle market will decline as people keep their vehicles longer or opt for alternative means of transportation.
- Because the European OEMs are not producing small cars, it may become “a royal road for the development of non-European carmakers in Europe, in particular Chinese carmakers, who do not necessarily meet the same objectives as European carmakers (search for profitability, in particular).”
So if it is assumed that the U.S. OEMs will increase EV production and, because of the additional cost of transitioning to the EV model from ICEs* they build primarily higher-priced vehicles (which we are seeing now with the chip shortage) and eliminate small cars (think only of what has happened to Ford’s car lineup), then they certainly better hope that tariffs are in place because that “royal road” could become a superhighway because cheap Chinese cars could come rolling in because that’s what the vast number of domestics purchasers can afford.
*Although everyone talks about battery costs declining and therefore reaching parity with gasoline power, let’s not forget about the sunk costs in tooling and equipment for gasoline-powered vehicles that must be accounted for by the OEMs and suppliers. A non-trivial cost.