Europe set to be world’s largest EV market this year

Europe will remain the world’s largest market for electrified vehicles in 2021, with sales set to rise by more than half to five million units.

That’s faster than in China and the US, while EV start-ups will increasingly lose market share to incumbent manufacturers, according to a Scope Hamburg report.

Consumers will have a choice of more than 500 different EV models worldwide, up around 40% from the 370 on offer in 2020, itself an increase of 40% from the previous year.

Common to all markets is the growing variety of EVs on sale, it adds.

As original equipment manufacturers (OEMs) such as Volkswagen AG ramp up EV production, more models will be available in more markets too, though Tesla is set to remain the biggest individual seller of EVs.

“For 2021, we expect the global EV market to rise by more than 50% mainly driven by the expected expansion of the European EV market,” Scope Hamburg managing director Werner Stäblein says.

“Tough emissions targets, generous subsidies and the wider availability of different EV models explain the sustained boom in the European market.”

In China, the second largest EV market, Scope expects growth of about 40% in 2021, helped by the delayed phase-out of government subsidies.

Growth in the US should accelerate after sluggish 4% growth in 2020, marked by fewer new models on the local market and the expiry of subsidies for purchasers of cars made by General Motors and Tesla.

“With a further 150 new EV model launches in 2021, competition for electrified vehicles will heat up across all vehicle classes from small-sized to larger cars and SUVs,” says Stäblein.

Consolidation in the EV segment is on its way.

“As the EV market develops, we expect selective failures of EV start-up companies once it becomes clear how difficult and costly it is to establish and maintain economies of scale in production, sales, distribution and, most importantly, brand building,” Stäblein explains.

Volkswagen’s and Tesla’s “battery days” provided insight about the projected development of battery costs in the next few years.

Further cost improvements are likely through better battery chemistry. Gains in economies of scale will be less important as the battery-production learning curve also flattens out. 

But the report notes battery technology is yet to reach cost-parity with the internal combustion engine (ICE).