Progress, innovation, renewable energies, and the goal of a CO2-free future, which is increasingly becoming the focus of social and political attention, are having a rising influence on the automotive industry. Away from combustion engines, towards electromobility. The new EU climate plan “Fit for 55”, issued in July 2021, calls for a reduction of CO2 emissions for the automotive sector by 55% until 2030 and down to zero for the year 2035 – a goal that is already known from the “Green Deal”, but is now to be achieved even faster. Leading German car manufacturers are also becoming more precise about phasing out the internal combustion engine. The last car models with this propulsion technology are planned to leave the factories by the middle of the next decade. What does this mean for the market share of German car manufacturers?
VW is aiming to withdraw from the internal combustion business step by step, taking a market-specific approach, but also emphasizes that the future is electric. The last combustion cars for the European market are to be produced between 2033 and 2035; in the USA and China however, the complete phase-out is planned to take place later. VW’s premium subsidiary Audi is taking an example from the market-specific phase-out and plans to develop neither vehicles with combustion engines nor hybrids for the global market from 2026. Production is to be phased out slowly by 2033, with a likely exception for China. For the Chinese market, the company is leaving open the possibility of using internal combustion engines for longer. If necessary, with the help of local production. The goal is also to be able to offer customers a range of twenty electric vehicles by 2025. BMW announces that by 2030 at least 50% of sales will be generated by electric vehicles, including hybrids so far. Furthermore, BMW aims to offer the Mini exclusively fully electric from the beginning of the 2030s. Current CEO of BMW AG, Oliver Zipse, announces the goal to bring “the greenest e-car” to the market. A respective study for this goal was presented by BMW at the IAA Mobility with the “BMW i Vision Circular”, but with perspective to the year 2040. Numerous other global OEMs such as Daimler, Mercedes, Porsche, Jaguar, Ford, Volvo, Honda, GM, Renault, Mazda, Hyundai and Kia are also on the electromobility offensive.
What does the transformation of the automotive industry mean for the market share of German manufacturers?
China is considered the most important sales market for German car manufacturers, even after the Corona pandemic, and has also announced that it will distance itself from internal combustion engines and focus on electromobility and in-house production in the future. Already today, most battery-electric vehicles are sold in China, with a share of 57%. Volkswagen, BMW and Daimler achieved total sales of 35-44% in China in the first quarter of 2021.
To continue generating sales in line with this trend, Germany’s electromobility offering should remain attractive and become even more competitive. Current data shows that German manufacturers are having increasing difficulties in retaining their customer base, as technology is partly behind that of Chinese and American manufacturers, especially in digitalization. For example, tech-savvy Chinese consumers are more likely to buy electric cars from their own production or from Tesla, as software, performance parameters and technology score high on progress and functionality.
Tesla’s latest Model Y is the world’s best-selling electric vehicle to date, outselling German models such as the ID.4, ID.4 CROZZ, iX3, e-tron, and EQC on the Chinese market. In May 2021, Audi’s e-tron recorded just 50 sales, Volkswagen comes in at 847 ID.4 and 504 ID.CROZZ, whereas Tesla is the frontrunner with 12,748 Model Y vehicles sold. Though, Chinese EV manufacturer BYD crossed in August 2021 the sales mark of 60,000 electric vehicles in China, compared to Tesla as strongest foreign electric brand with >44,000 cars sold.
Figure 1: Sales development NEV (BEV+PHEV) in China 2020-2021 (source: CNEVPOST.com)
In its most important market in China, Volkswagen gains only a fraction of total sales from electric cars, while the share of combustion cars diminishes. Sales losses cannot currently be compensated for in North America or Europe. Moreover, the repertoire of battery-electric vehicles from China, Korea and the USA is not yet fully available on the European market, which is like a grace period for German car manufacturers. With the growing supply and the arrival of new models and even brands from Asian and US manufacturers, there is a risk of losing further market share. Tesla’s Model 3 is the front-runner in Europe in the first half of this year, while the Chinese-made Model Y just celebrated its European release in August.
It remains exciting to observe how German car manufacturers shape their transition and how market shares also from the new OEMs will develop in the global markets.
We at Receeda live and breathe electromobility topics and look forward to a promising future, which holds further challenges for the automotive industry, especially for the traditional manufacturers.