European battery electric vehicle (BEV) market experienced a boost in 2022
In North Europe, the electric vehicle (EV) market is experiencing significant changes, with key markets accounting for over 90% of regional new pure electric car volumes witnessing minor reductions in battery electric vehicle (BEV) prices. This price adjustment comes as Original Equipment Manufacturers (OEMs) react swiftly to fill subsidy gaps, as seen in Germany, where BEV registrations surged in 2022, accounting for nearly one-third (31%) of the region's new pure electric models.
The surge in Germany may be attributed to a pull-forward effect, as a government purchase subsidy was reduced going into 2023. Meanwhile, countries like the UK and Switzerland have implemented similar legislation with minor deviations, following the European Union's update of its passenger car CO2 fleet average emissions legislation in 2020.
However, the pace of growth in BEV volumes is expected to decelerate in 2023. Some manufacturers are delaying the introduction of more BEV-dedicated models until 2025 to meet the next cut in CO2 legislation. This strategy is evident in Norway, which accounts for eight in ten of its new car market with BEVs and has a 2025 ban on new ICE passenger car models. Despite this, tax rates for plugin models are increasing in Norway from this year.
In contrast, fiscal benefits remain in Sweden, and the UK and Sweden have completely shut down their government BEV premium purses. Politicians in these markets are looking to fill budget gaps, with the aim to achieve scaling benefits for new models, such as BMW Group's NeueKlasse based models.
Recently, no German car manufacturers have been reported to have successfully closed subsidy loopholes for BEVs by lowering prices following the complete shutdown of BEV subsidies. Instead, there is an expected strong price attack by Chinese EV manufacturers, prompting German brands like VW to respond quickly to remain competitive.
This information is sourced from Schmidt Automotive Research. The EFTA markets Norway and Iceland are part of the EU's CO2 legislation equation, adding another layer of complexity to the evolving EV market in North Europe.
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