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Global Economy

A growing success story

E-cars are in the fast lane on European roads. Europe has now overtaken China as the world's largest market for electric vehicles. The number of registrations of electrically powered cars developed significantly better during the pandemic than those of vehicles with petrol and diesel engines, whose sales fell sharply.

Sales figures with a clear upward trend

Last year, too, the number of new registrations of battery-powered e-cars in the EU rose significantly compared to the previous year: from 539,000 to 878,000 vehicles. According to the European manufacturers' association ACEA, most were sold in Germany; then come France, Italy and the Netherlands.

And the upward trend is continuing, as a look at the first quarter of 2022 confirms: According to ACEA, battery-powered cars have almost doubled their market share compared to the same period last year and now account for ten percent of all sales. Plug-in hybrids with a combined electric/combustion engine drive have a market share of almost nine percent.

In some cases three-digit growth rates

Many EU markets even recorded three-digit growth in battery-powered vehicles, most notably Romania with an increase of more than 400 percent – but the country also has some catching up to do. Something is also happening on the major car markets: Spain reports an increase of 110 percent, followed by France with an increase of 43 percent and Germany with 29 percent more registrations. In Italy, on the other hand, sales of electric cars with batteries fell by 15 percent.

The number of registrations of plug-in hybrid electric vehicles fell across the EU in the first quarter. Overall, however, they were able to expand their market share because sales of petrol and diesel vehicles have declined. Combustion engines are still the market leader with a share of just over 50 percent, and petrol engines remain the most popular cars, but e-vehicles are catching up, including in the most important European markets of France, Italy, Spain and Germany.

The share of e-cars in the total number of all cars registered in Germany is still very manageable: in the spring there were 687,000, or around 1.3 percent. By 2030, the traffic light coalition wants to bring 15 million electric cars onto German roads.

A non-EU country is showing the way

Berlin can take a non-EU country as a model here: In Norway, new registrations of e-cars have long overtaken vehicles with combustion engines. Over 100,000 battery-electric cars were sold in Norway last year. This corresponds to 65 percent of new registrations.

This is partly due to the lavish funding, which makes e-cars a third cheaper than combustion engines. Import and VAT are eliminated, e-drivers do not pay congestion charges and charging is free. However, Norway has the same problem as many EU countries: Because chips and wiring harnesses are missing due to delivery bottlenecks, car buyers sometimes have to wait months for a new vehicle.

Funding is available almost everywhere

Many European countries want to persuade consumers to buy an e-car with bonuses and tax benefits. Romania is ahead in terms of funding – there you get up to 10,000 euros as a subsidy for the new Stromer, in Croatia it is around 9200 euros. In France and Slovenia, the premiums are slightly lower than in Germany at around 7,000 euros; in Italy, Spain, Sweden and Ireland they are between 5000 and 6000 euros.

The Netherlands offer purchase bonuses and tax breaks – also for companies that convert their car fleets to alternative drives. Belgium's government does not award purchase premiums, but individual regions support private individuals. Poland introduced a purchase premium in mid-2020, which significantly increased the share of e-cars in new registrations. In addition to bonuses and tax advantages, e-car drivers enjoy other advantages in some EU countries: free parking, free travel in bus lanes, discounts on tolls on motorways and in cities. However, Estonia completely dispenses with purchase incentives.

Carrot or Stick?

According to the organization Transport & Environment, which promotes sustainable transport, there needs to be a balance between premiums and taxes in order to persuade as many people as possible to switch to e-mobility. After that, France and the Netherlands, for example, rely on carrots and sticks: bonuses for electric cars, high taxes on combustion engines.

According to Transport & Environment, Germany, on the other hand, only relies on carrots: the federal government lures e-car buyers with high premiums, but imposes comparatively low taxes on large combustion cars. In addition, company car taxation, which the association believes is too generous, means that in Germany only half as many company cars are driven electrically as private cars.

The German e-car funding is made up of an environmental bonus (car manufacturers and the federal government) and an innovation bonus and amounts to up to 9000 euros for battery-powered and 6750 euros for plug-in hybrid cars. The innovation bonus expires at the end of the year. After that, there should only be the simple federal share (environmental bonus). The FDP ministers in the federal government also want to abolish this as soon as possible. The SPD and the Greens oppose it.

Charging stations, but fast!

In addition to state subsidies, it is important for potential e-car buyers to find enough charging points on the journey – even when traveling to neighboring European countries. One thing is certain: without a dense network of powerful charging stations, the transition to e-mobility will not succeed. According to the EU Commission, the member states should ensure that charging stations are installed every 60 kilometers along the most important expressways over the next three years.

There is still a lot to be done: Currently, around half of all charging stations in the EU are in just two countries, namely the Netherlands (29 percent) and Germany (19 percent). Coverage is also comparatively good in France, Sweden and Italy. In the Baltic States, as well as Malta and Cyprus, on the other hand, e-car drivers have to search for charging options for a long time.

According to the manufacturer association ACEA, the current 307,000 charging points in the EU are far from sufficient to promote the sale of e-cars and to achieve the climate targets. The association is demanding around 6.8 million public charging points by 2030 – 22 times as many in eight years as today. In Germany, the expansion of the charging infrastructure is progressing, but is also well behind demand. The Federal Network Agency reports 53,000 publicly accessible charging points for electric vehicles.

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