EV sales could shrink next year

Australians in the market for an EV may be left high and dry in the next two years as the world’s car-makers focus on sending their cleanest machines to Europe instead.

As car-makers switch gear next year to meet more stringent European CO2 emissions rules, there are fears that other countries will miss out on the latest generation of plug-in hybrid electric vehicles (PHEVs) vehicles and full battery-electric vehicles (EVs).

The entire European car industry is gearing up for an emissions war next year, ranging from Volkswagen’s six-car ID EV model range to Mercedes-Benz’s seven-car EQ EV family and a fleet of EVs from the Renault-Nissan Alliance.

The pioneering Mercedes-Benz EQC is in limited supply Down Under with first customer deliveries not due until early next year, while VW Australia’s first EV, the Volkswagen ED.4 SUV, won’t come here until 2022.

“I think OEMs will push their electric cars into Europe and other countries will suffer,” Transport and Environment director Greg Archer admitted.

The independent environmental lobby group has tallied up that EVs will make up 3.1 per cent of the entire European car market next year, while PHEVs will make up 2.5 per cent. That should rise to 6.4 per cent for EVs in 2021 and 6.1 per cent for PHEVs, Archer said.

In Australia, sales of new PHEVs and EVs like the Hyundai IONIQ and Jaguar I-PACE have more than doubled so far in 2019, but from a low base of just 1250 cars last year to about 2700.

Meantime, in Europe, plug-in vehicle sales climbed from 384,000 last year to around half a million this year.

“Now the market is primed for take off in 2020,” Archer said.

“The total rechargeable sales in Europe will rise to 5.5 per cent next year and 12 per cent in 2021.”

But countries other than Europe and China will be left with limited supplies of plug-in cars, he warned.

“Other countries where the sales do not count towards the EV market in Europe, well, I think supply will be very limited,” Archer insisted.

“Switzerland is not part of the EU target, for example, and they will suffer.

“What it will mean is that the supply of the EVs will be focused on the EU for a while.”

However, the Australian Federal Chamber of Automotive Industries (FCAI) has yet to see any signs of a shortfall in the supply of electrified cars for next year.

“The current discussion here in Australia has not raised any concerns in terms of supply for EVs and PHEVs,” said the FCAI’s director of public affairs, Lenore Fletcher.

“In fact, we have seen some good growth this year – albeit from a small base – and we are expecting several new models in 2020. “

Instead of a shortfall of supply being the problem, the FCAI suggested instead that the lack of government support for zero-emission technology provided a largest impediment to EV conversion.

But Archer went on to suggest that Honda, in particular, will need to move its technology in a hurry to meet the new regulations or face billions of euros in fines.

Hyundai, Kia, Mitsubishi and Ford were the other car-makers at serious risk of missing their targets. Ford’s emissions in Europe this year have been above BMW’s as a brand, not including the smaller MINI models.

“It tends to be the Japanese and Korean car companies that have a lot of work to do, but not Toyota. They are the best-placed brand for Europe,” Archer confirmed.

“FCA was in trouble, but now Tesla sales count towards the FCA total target.

“Toyota has a similar agreement in place with Mazda. Mazda was one of the companies that had the most trouble.”

Another significant issue with the build-up to the brave new world of electric cars has been the ramp-up of battery production, plus the sourcing of key components like lithium and cobalt.

The car industry is already facing tougher CO2 emissions regulations for Europe next year under the EU7 legislation’s 95g/km CO2 fleet average.

Another 15 per cent cut is planned for 2025, while a 37.5 per cent reduction has been slated for 2030, taking Europe’s vehicle fleet average down to 60g/km.

Yet, instead of falling, CO2 emissions in Europe have been slowly rising for two years, climbing to 120.4g/km last year.

Industry analyst Matthias Schmidt insists this backslide in emissions is largely due to manufacturers holding back their EV and PHEV machines until they count towards 2020 EU7 emission averages.

“Europe’s EV passenger car market threw the anchor overboard in October as OEMs likely stepped on the brakes to shift deliveries to 2020,” Schmidt said.

“Renault is also shifting EV demand to 2020 to benefit lower CO2 fleet average targets. They are no longer delivering the ZOE 5.0 due to a ‘software reprogramming’. Creative.

“I continue to believe PHEVs will return in a big manner next year to help achieve CO2 targets.”

He also pointed out that especially PHEVs were almost pulled from the market last year after the introduction of the tougher Worldwide Light Vehicle Harmonized Test Protocol (WLTP) to replace the laboratory-based NEDC system.

Transport & Environment’s Archer is confident that most OEMs will meet their CO2 targets, but also teased that there may be huge discounts if any of them strike trouble along the way.

“I think there will be much more stock on the market in 2020 and I would expect the prices to be much more competitive [than they have been].

“If there are manufacturers later in the year who look like they could miss their targets there will be some very good leasing and sales deals.

“There are potentially enormous fines for missing the targets. It’s 95 euros per gram of CO2 they miss by, per car sold in the entire range.

“If they make no progress from today they are looking at a billion euros a year.”

There are other issues, though. Some big-selling cars may have to be withdrawn from to ensure EU7 emissions compliance and companies may choose to offer big discounts on lower-capacity variants.

“Sometimes, even though they need to sell this many cars to meet their targets, they won’t be able to do that. They will have to withdraw some cars for sales or encourage low capacity vehicles,” Archer confirmed.