Europe’s shift to EVs picks up despite recession

Source: By David McHugh, Associated Press • Posted: Thursday, July 16, 2020

The 27-country European Union is moving ahead with a major shift in transportation as part of the bloc’s efforts against climate change. Under regulatory pressure, carmakers are rolling out a slew of new electric models so they can meet tougher limits on greenhouse gases that come into full force next year.

Battery-only models are becoming more affordable, especially as sales are supported by substantial government subsidies. As sales of internal combustion cars have fallen, demand for battery-only cars and hybrids that combine electric motors with conventional engines has been stable or even increased, recent statistics show. By contrast, electric car adoption is moving more slowly in the U.S. due to regulatory uncertainty.

The market share of battery and hybrid vehicles rose sharply across major European markets during the first half of the year, even as the outbreak closed showrooms in March and April. Germany saw an increase to 8.4% from 3.4% a year earlier as overall sales of all car types slumped 35%. France saw the plug-in share jump to 9% from 2.5%. Sweden saw a surge to 25%, from 10%.

One of the pandemic car buyers was Frank Schendel, a dentist from a small town outside the Bavarian city of Augsburg. In May, he bought a battery-powered Hyundai Kona Elektro, a compact SUV-style hatchback. He had rented a Tesla on vacation for a couple of days.

“My son is getting his driver’s license at the moment, and a Tesla is bit too expensive and too fast, so I was glad to discover the Hyundai Kona,” he said.

He hasn’t driven his 10-year-old Mercedes E-Class station wagon since. “It’s fun, fast and quiet, technologically up to date,” said Schendel, 52. “We drive the Kona everywhere: 500 kilometers to visit grandma, grocery shopping. We do every trip with the Kona.”

The 64 kilowatt-hour battery has a range of up to 484 kilometers, enough to reach grandma with just one stop at a highway charging station.

Electric car buyers are attracted by large government incentives. Under the German government’s latest stimulus package, for example, an electric car with a price tag under €40,000 is eligible for a €9,000 incentive, €3,000 of that to be paid by the manufacturer.

Car buyers now have 70 different battery and hybrid models to choose from, with prices starting below €20,000 including those local subsidies in the case of the Seat Mii, Renault Twingo ZE and Skoda CITIGOe IV. Volkswagen says it will start delivering its ID.3 battery hatchback by year’s end, starting under €30,000.

“The demand is growing fast, very fast,” said Juergen Sangl, an auto dealer in the town of Landsberg am Lech who sold Schendel his Kona. Sangl decided in 2016 to anticipate the trend and focus on electrics, which are 90% of his business. “It has gone the way I suspected it would — first a trickle, now a flood,” he said. Beyond the incentives, customers find electrics more attractive once range exceeds 300 kilometers (186 miles) on a charge.

The pandemic has nonetheless caused huge pain for carmakers. Daimler AG, maker of Mercedes-Benz luxury cars, says it will intensify cost-cutting efforts. “Our previous efficiency goals covered the upcoming transformation, but not a global recession,” said Daimler CEO Ola Källenius.

Automakers in the E.U. need to reduce the average emissions of their fleets to 95 grams of carbon dioxide per kilometer driven starting next year. That’s equivalent to 57.4 miles per gallon of gasoline.

To achieve that, manufacturers will have to lift electric sales from 7% to 12% of the market, according to advocacy group Transport & Environment. The new limit is part of the E.U. effort to comply with the 2015 Paris climate accord to reduce carbon dioxide emissions, blamed by scientists for global warming and accompanying climate change.