European consumers are buying electric cars at a faster pace than ever, encouraged by government subsidies and the availability for the first time of models built by their favorite brands.
The boom is so strong that Europe passed China as the world’s largest electric-vehicle market last year. Its share of new electric-car sales nearly doubled to 43%, while China and the U.S. lost market share.
But Europe’s surge relies heavily on government incentives doled out during the pandemic, and analysts warn the momentum could be reversed if and when that support is withdrawn. Most government EV subsidies are limited in scope and due to expire by the end of this year.
“The market is extremely sensitive to government and company discounts,” said Arndt Ellinghorst, auto analyst at Bernstein Research. “Once subsidies are taken away EV sales will collapse by 30-40% at least for one or two quarters.”
Without the subsidies, EVs are still considerably more expensive than equivalent combustion-engine vehicles. This isn’t likely to change until later this decade, analysts say, as battery prices come down because of new technology, greater scale and competition.
Europe’s approach started with more sticks than carrots. The European Union in particular has steadily tightened emissions requirements, prompting the industry to roll out more electric cars and hybrids, or face hefty fines.
When the pandemic hit, governments looking to cushion the economic shock began targeting aid at industries on the front line of the battle with climate change. A big part of this assistance went into incentives for consumers to buy EVs, creating a surge in demand.
The moves changed the perception among industry leaders that there wasn’t a market to justify the huge investments needed to build electric cars.
“We have an incentive to build these cars…It helps make the EV very attractive for the consumer,” said Hakan Samuelsson, chief executive of Volvo Cars, the Swedish car maker owned by China’s Zhejiang Geely Holding Group. “But long term these incentives and tax breaks are not sustainable.”
Car makers began rolling out new models in earnest last year. Volkswagen AG, Europe’s biggest auto maker, unveiled its ID.3 and ID.4 models. Premium car makers such as BMW AG, Mercedes and Audi launched high-end EVs. This year, Mercedes is set to launch the EQS, which will be an electric and highly automated successor to the flagship S-Class.
Around 65 new EV models launched in Europe last year—twice as many as in China—and another 99 are slated to come to market this year. That compares with 15 launches in North America last year and a planned 64 this year.
Manufacturers say the incentives and an explosion in the number of new EV models came together at the right time, energizing both supply and demand.Gone are the long waits at charging stations: Chinese electric-vehicle startup NIO is pioneering battery-swap systems, challenging Tesla and other rival car makers. Here’s how NIO and Tesla are racing for the world’s largest EV market in China. Photo illustration: Sharon Shi
“You have to have the right product on offer…That’s what we saw last year in Europe,” said Britta Seeger, board member at Daimler AG in charge of global sales. “The offer is better, and subsidies are supporting sales.”
The availability of EVs with familiar brand names is also pushing sales. Hallgeir Langeland, a 65-year-old Norwegian environmentalist and former politician, hasn’t owned a car for 25 years, but when Ford Motor Co. rolled out a fully electric version of its Mustang last year, he didn’t think twice.
“I had to have it,” he said, recalling the Mustang he drove in his youth. Now he can’t wait for it to arrive in March. “It’s cherry red.”
The purchase was made easier by subsidies that have made Norway the world’s biggest EV market per capita, prompting a tongue-in-cheek Super Bowl ad by General Motors Co. starring Will Ferrell, who called on American consumers to buy EVs and crush Norway.
Christian Burg, who runs a business building energy-efficient houses in Germany, had driven a diesel BMW X3 SUV for years. When the government boosted subsidies for electric cars last summer, he applied for a small-business grant and switched to the new iX3 plug-in hybrid version of the car.
“We received 3,750 euros [equivalent to $4,500] in cash incentives,” he said.
Sales of plug-in electric vehicles in Europe rose 137% to 1.4 million vehicles last year, outpacing China, which recorded a 12% increase to 1.3 million, and the U.S., where sales rose 4% to 328,000, according to ev-volumes.com, a research group.
The state of Europe’s market is reminiscent of China’s electric-vehicle trajectory years ago. Determined to leapfrog Western markets, Beijing provided hefty subsidies for purchases and required manufacturers to ensure that a certain percentage of new cars produced each year were electric.
The effort helped spawn hundreds of startups and boosted the share of EVs to more than 8% of new-car sales by mid-2019. Then Beijing slashed incentives in June 2019 and sales plunged, with the share of EVs falling below 5% by the end of the year. When the pandemic hit, China’s EV sales slumped further, raising doubts about Beijing’s ability to reach its goal of having them account for 20% of new-car sales by 2025.A production line for Volkswagen’s ID.4 in Zwickau, Germany. Photo: matthias rietschel/Reuters
Beijing reinstated EV subsidies early last year but slashed them again in January in a renewed effort to wean consumers off them.
In Europe, national governments are reconsidering plans to phase out the current regime of EV subsidies at the end of the year. Analysts suggest that governments in countries that produce a lot of autos, such as Germany and France, could extend aid beyond this year.
While most industry leaders welcome government efforts to jump-start new technology markets such as electric vehicles, auto makers worry that subsidies will only have a short-term impact and without broader structural changes won’t create a self-sustaining market.
Instead, they urge governments to focus more on developing infrastructure such as charging stations, providing support for building battery plants, and taxing carbon-dioxide emissions.
Write to William Boston at email@example.com
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By Kate Abnett and Andrea Shalal
WASHINGTON (Reuters) - Senior officials from Europe have urged the World Bank's management to expand its climate change strategy to exclude investments in oil- and coal-related projects around the world, and gradually phase out investment in natural gas projects, according to three sources familiar with the matter.
In the six-page letter dated Wednesday, World Bank executive directors representing major European shareholder countries and Canada, welcomed moves by the Bank to ensure its lending supports efforts to reduce carbon emissions.
But they urged the Bank - the biggest provider of climate finance to the developing world - to go even further.
"We ... think the Bank should now go further and also exclude all coal- and oil-related investments, and further outline a policy on gradually phasing out gas power generation to only invest in gas in exceptional circumstances," the European officials wrote in the letter, excerpts of which were seen by Reuters.
The officials took note of the World Bank's $620 million investment in a multibillion-dollar liquified natural gas project in Mozambique approved by the Bank's board in January, but did not call for its cancellation, one of the sources said.
The World Bank confirmed receipt of the letter but did not disclose all its contents. It noted that the World Bank and its sister organizations had provided $83 billion for climate action over the past five years.
"Many of the initiatives called for in the letter from our shareholders are already planned or in discussion for our draft Climate Change Action Plan for 2021-2025, which management is working to finalize in the coming month," the Bank told Reuters in an emailed statement.
The Bank's first climate action plan began in fiscal year 2016.
The United States, the largest shareholder in the World Bank, this month rejoined the 2015 Paris climate accord, and has vowed to move multilateral institutions and U.S. public lending institutions toward "climate-aligned investments and away from high-carbon investments."
World Bank President David Malpass told finance officials from the Group of 20 economies on Friday that the Bank would make record investments in climate change mitigation and adaptation for a second consecutive year in 2021.
"Inequality, poverty, and climate change will be the defining issues of our age," Malpass told the officials. "It is time to think big and act big in finding solutions,"
He said it was also launching new reviews to integrate climate into all its country diagnostics and strategies, a step initiated before the letter from the European officials, said one of the sources.
(Reporting by Andrea Shalal in Washington and Kate Abnett in Brussels; Additional reporting by Valerie Volcovici in Washington; Editing by Matthew Lewis)
Post Malone and Pokémon: a combination so crazy that it just might work.
Malone had the honor of kicking off P25 Music, a year-long celebration in partnership with Universal Music Group, on Saturday — the official Pokémon Day, no less — with a virtual concert that livestreamed on Pokémon’s YouTube and Twitch accounts, and its website. The tribute was short, clocking in at just under 15 minutes, but set the stage for what the rest of P25 Music might look like: a showcase of the vast world of Pokémon while also appealing to your casual listener of the Hot 100.
And it’s not as if Malone was on stage with his rendition of the classic PokéRap (although this writer, for what it’s worth, would’ve loved to see it). It might have looked like any other virtual concert — if it weren’t for the various Pokémon that swirled around Malone throughout the show. Like the Travis Scott “Fortnite” concert that came before it, the P25 Music kickoff took advantage of its format to make the experience one that was truly unique, if not a little surreal.
The concert kicked off with an animated version of Malone (one that debuted in preparation for the event earlier this week) greeting a stadium of what looked like hundreds of thousands of pixelated fans, jumping into his hit “Psycho” as a giant Pikachu electrocuted the stage. As Malone continued to perform, he was swept away on a floating piece of land to tour various environments to find different types of Pokémon. After soaring among the Butterfree, he found himself in a dark forest, surrounded by the glowing Shiinotic and Umbreon as he transitioned into one of his biggest hits, “Circles.”
Eventually, he was also whisked away to more of the Pokémon world — from the skies with Braviary, down to the seas with Jellicent. He went on to virtually perform his new contribution to P25 Music, his cover of Hootie & the Blowfish’s “Only Wanna Be With You,” which samples the Ecruteak City theme from “Pokémon Gold and Silver” to give it that Nintendo flare, while dancing along with Charizard and Groudon.
Is there something a little bizarre about watching a cartoon Malone vibe with a legendary Pokémon while singing his rendition of a Hootie hit? Sure there is. But, in its own way, that alone is a fitting tribute to Pokémon’s long relationship with top musicians. After all, who can forget Donna Summer’s powerful vocals on “The Power of One” to cap off “Pokémon: The Movie 2000”? Pokémon has always recruited famous artists to celebrate their Pocket Monsters — Malone (who’s apparently a Pokémon fan himself, holding onto a Game Boy Color just to play the games) is just the latest in a long legacy.
After Malone returned to the stadium, closing out his set with his Quavo collaboration “Congratulations,” he teased some of what’s to come in P25 Music: new music from Katy Perry, J Balvin and “many more artists.” And it’s anyone’s guess as to which Pokémon Perry and Balvin will dance with, or which of the game’s classics they might sample in their new offerings. But it’s clear The Pokémon Company is pulling out all the stops to celebrate 25 years of one of the world’s most durable franchises.