– The car markets look to Norway, but both the level of ambition and sales are falling, writes Erik Solum in BIL’s new blog about trends in the car market, “Market Insight”.
In August, according to OFV, electric cars accounted for over 94 per cent of new car sales in Norway. The proportion of electric vehicles has never been higher. In Norway, the incentives for electric passenger cars have been strong, predictable and unbureaucratic.
The rest of the world is following – at a slightly different pace. China and the EU have clear ambitions that are reflected in sales. At the same time, we see that incentives from the authorities play an important role.
Europe: Small increase, despite negative media stories
Through tabloid headlines in the media, it is easy to believe that there is a reduction in European electric car sales. And yes, in some countries it is. But if we look at it a little more broadly, the figures from the first seven months of the year show that there is rather a small increase in the proportion of electric cars. From 1,087,000 cars last year, to 1,094,000 cars this year.
In Germany, incentives for electric cars were reduced in January, leading to lower sales. The German authorities are now taking action and introducing new incentives with the aim of increasing sales again. In other countries, according to ACEA, we see solid electric car growth – for example in France (+13%), Denmark (+51%) and the UK (+11%).
Will reach more buying groups with smaller electric cars
Furthermore, we see that several manufacturers are in the initial phase with new, smaller electric cars. These models have sufficient range and prices close to or similar to their siblings with internal combustion engines. This could lead to a larger consumer group being reached and sales to be increased. Economies of scale with lower production costs for electric cars, together with incentives, mean that the tipping point for when electric cars become the natural choice varies in different markets. A final point is the CAFE rules in the EU, which simply means that the various car manufacturers have an average emission requirement that they must meet. This naturally promotes the sale of electric cars.
China: NEV cars with the wind at their backs
China’s transformation to electric car sales reached a milestone in July. At the time, more so-called “new-energy vehicles” (NEVs) were sold than cars with conventional drivetrains, according to S&P Mobility and the China Passenger Car Association (CPCA).
The NEV category includes electric vehicles and plug-in hybrids. The analysts estimate that the NEV share will be 46% for 2024, up from 36% in 2023. Around 60% of NEV sales are electric cars. A trend in recent months is that the hybrid share is growing the fastest, but we believe this is temporary and that electric cars will dominate over some time.
Globally: The trend is clear, but the targets are being pushed forward
In Bloomberg’s latest analyses, they calculate global electric car sales to be 45% of total sales in 2030, and 73% of the total in 2040. Car manufacturers are working hard to offer a good combination of functionality, range and price.
At the same time, there is a recognition in the industry globally that electrification will take time. Maybe a little longer than some predicted. This is reflected in car manufacturers who are pushing the target of when they will be fully electric. Nevertheless, most car manufacturers are clear that at some point they will become just that.
As we have seen, consumers react to incentives, and although changes in the incentives in some markets have an impact on sales, the trend is clear: the rest of the world is also in the process of becoming electrified.
It just takes a little longer than we first thought.