Despite Coronavirus, the plug-in market in Europe grew by well over 100% this year and it will happen again in 2021.
BEVs (Battery Electric Vehicles) will grow by more than 100% and surpass the growth of plug-in hybrids (PHEVs). In 2019, the UK sold 38,000 BEVs and the UK is currently on track for between 98,000 and 101,000 BEV sales by the end of 2020.
Those in the industry are predicting that in 2021 there will be over 200,000 BEVs sold; approximately 70,000-80,000 PHEV sold and over 125,000 Hybrid Electric Vehicle (HEV) sold.
The HEV market will continue to grow, but more slowly, meaning that pure EVs (BEVs) will outsell non-plug in hybrids (HEVs) over the whole year. Then, if there is limited economic damage after the end of the UK’s EU transition period, BEVs will continue to outsell HEVs for at least the first six months of 2021 too.
A PHEV is a plug-in Hybrid, while a HEV is just charged by its internal Combustion engine. PHEVs can in theory travel entirely emissions-free, if you don’t exceed their short range; however, HEVs can’t because all their energy comes from fossil fuels.
There’s quite a bit of controversy in EV circles about the term “self-charging” hybrid, since it sounds like the energy appears magically. In fact, all the energy comes from fossil fuels; a HEV merely charges up a battery when it brakes, i.e. it uses regen.
They were progressive in the 1990s – they’re not exciting now. In Norway, HEVs are HEaVily (sic) outsold by both BEVs and PHEVs and in the UK should be outsold by BEVs next year.
Osborne Effect will start to kick in
In addition, the Osborne Effect for petrol and diesel cars will start to kick in, declining by at least another 10% and 30% respectively (though mild HEVs, such as –
- Audi A8, Audi A7 Sportbacks Range Rover Evoque (2018–)
- Mazda 3 (2019-)
- Mazda 2 (2020-)
- Fiat 500 Hybrid (2020-)
- Fiat Panda Hybrid (2020-)
– these vehicles will occupy a larger proportion of that); so BEVs will reach 12% of the UK market, and BEVs and PHEVs 19% of the market.
The Osborne Effect is where a company suffers a financial crisis due to its customers postponing or cancelling orders whilst waiting for the newest version of its technology.
In this case, it means that at least one major car manufacturer will ask for a government bailout; large-scale redundancies of ICE vehicle workforce and in particularly ICE R&D teams will effectively spell the end of the ICE era (since no new ICE engines will make it onto the market).
At the same time, the market for car maintenance will pick up; emissions will at last start to fall, but – paradoxically – by less than they should because people are keeping older cars on the road. Another influential factor – the growing number of second-hand electric vehicles coming on the market as earlier adopters people move onto their second or third EV.
As a consequence, those key drivers for greater uptake over EVs for next year – together with tax incentives for fleets – will have a knock-on effect in pushing charging infrastructure forwards.
Increased price pressure for low cost chargers
With anticipated growth in the number of EVs on our roads, we’re likely to experience strong price pressure for low cost chargers during 2021. Despite reliability concerns around quality of some chargers on the market, sales of EV chargers will grow, but this will be coupled with a downward pressure on price.
In the UK, much of the low-cost charger market is driven by installers, particularly with new government regulations coming in around the requirement for new build homes to be equipped with electric vehicle chargers. Ultimately, both public and domestic chargers will get cheaper due to economies of scale and competition.
Payment and scheduling system improvements for EV charging
Debit card payments will become the norm, rather than bespoke app or web-based systems. Innovative apps will become available to better manage public charger scheduling. The challenge of making public chargers pay for themselves, however, will remain, primarily because domestic electricity is cheap and utilisation is currently low (approx. 10%) making payback periods long.
Nevertheless, since there is a net economic benefit in driving EVs it should be possible to use this to finance the charging infrastructure whilst supporting the market.
Retreat from government subsidies
Government policy has had a massive influence on EV sales and chargers. Across Europe, although government policies differ country by country, they have helped to strongly influence take up of charging infrastructure.
In a business as usual scenario, subsidies will fall once the EV market has enough momentum, but on the other hand, the disruptive effect of EVs threatens car manufacturers and the greater urgency over decarbonisation means that governments will have to provide larger subsidies to car manufacturers.
Next year, we will begin to see a move away from everything being driven by government incentives. The public need to be weaned off subsidies and buy EVs just as they would make any major purchase. As the volume of EVs increases, the cost to manufacture them should decrease, making them more affordable. So, from 2021 onwards, we predict governments will start to scale down EV incentives.
#Avgasskam (AV-GAS-SKAM = Exhaust Shame in Swedish) – ICE vehicles start to become more unacceptable
The EV revolution has a cultural side too. Because exhaust pollution is uneven, we anticipate that ICE vehicles will start to become more socially unacceptable, especially in the wake of the cleaner air so many of us experienced during the COVID-19 lockdown.