Published on March 28th, 2020 | by Zachary Shahan0
What’s The Biggest EV Story Of 2020 Going To Be — Tesla or Europe?
March 28th, 2020 by Zachary Shahan
I started this piece before COVID-19 hit. Yes, the coronavirus pandemic is likely the biggest EV story of the year, as the impact has already been significant and it’s going to get larger. Nonetheless, there are a couple of major EV-specific topics in 2020 that I wanted to discuss briefly. Related to these, I also wanted to get your feedback on a question or five.
Europe’s EV Boost
First of all, we’ve got a dramatic increase in EV sales and an even bigger increase in EV market share in Europe due to changing regulations there. Simply put, automakers have to lower their “average fleet CO2 emissions” by selling a lot more EVs to people, or else they face huge fines. That means that automakers must do two main things:
1) They must make sure to have enough production capacity to sell the number of EVs required. (A major problem in the EV market that doesn’t get enough attention is that EV sales have been low because EV production has been too limited to meet demand.)
2) The automakers need to actually market these things. They need to try to sell EVs, rather than try to not sell them.
“But is it really going to change much? Isn’t the EV market just what it is?” Well, the results so far show that the policy is working very well and country after country in Europe is setting new records.
There are also some European markets that are simply much further along the “new tech adoption curve,” a trend line that seems pretty consistent across markets. As I reported earlier today, Norway’s EV market share was up to 68% in February, Iceland’s was up to 37%, Sweden’s was up to 26%, and the Netherlands’ was at 12%. That’s already a significant improvement over 2019’s record-breaking figures.
Note: The charts above are interactive. They may not show well on some devices. If they don’t show well for you, I advise viewing them on a different computer (preferably one that doesn’t fit into your pocket).
There’s a good chance EV market share will climb in many European countries as the year goes on. Germany, France, and other markets have been seeing record months for EV sales. In markets that get hit from a drop in overall sales, as we can expect due to the coronavirus pandemic, fossil fuel vehicle sales tend to drop significantly more than EV sales (if EV sales drop at all), leading to greater EV market share even if EVs are setting new sales records.
Several markets are at around 3–5% EV market share. Other markets have shown it’s often just a few years before those markets are at 15–20% EV market share. 2020 could see a strong step up the latter from many European countries.
Tesla, as usual, is another one of the biggest EV stories of the year. Tesla Model 3 production has been at a fairly steady clip for a while, but its production just got rolling in China. The contribution that gigafactory (Giga Shanghai) provides in 2020 will be interesting and influential.
An even bigger story is that Tesla just started Model Y deliveries. As I pointed out at the beginning of the month, the Model Y has been launched in a much quieter, stealthier way. Don’t let that make you complacent. Perhaps it will take Tesla several months to get through production bugs and get volume production up to notable levels. However, given that most of the vehicle is the same as the Model 3, I have a hard time believing a steep production ramp isn’t possible or even probable.
The big deal with the Model Y (in case you’ve been living in internet-free self-isolation for a few years) is that it’s a crossover/SUV with similar specs and pricing to the market-crushing Model 3. That combo means that it’s expected to sell better than the Model 3, Model S, and Model X combined — according to Elon Musk, me (totally on the same level, by the way), and other armchair fortune tellers. If the Model Y was only as popular as the Model 3, it’d still be a market shaker. If it’s as popular as Elon and I expect (I’m really just inserting myself here for fun now), it could be a market earthquake.
At the very least, with the growing number of Model 3s hitting streets every day and the coming silent rumble of the Model Y across the US and the world, I expect the “early majority” of the famous tech adoption S-curve will start really noticing Tesla and making first steps into the electric future.
The question is about how big of an impact the Model Y will have in 2020. And how much the Model 3 will continue to wake people up to electric motoring. It seems I’m still hearing or reading daily stories of people quickly joining the Tesla market after a brief introduction to a Model 3 or other Tesla.
To close, I’d like to put some questions to you, since I find that much of the insight and most interesting thoughts on this industry that I read come straight from our commenting community.
First of all, sort of an evil question (since there’s no real point in it aside from entertainment and it’s sure to be controversial): what is the bigger EV story of 2020 — Europe’s EV uptick or Tesla’s continued growth? (By the way, I didn’t even mention Full Self Driving or Battery Day, matters worth considering.)
Focusing on Europe, how do you see the market as a whole breaking out in the next 2–3 years? What kind of growth do you expect?
Also, what do you expect from specific large countries in Europe — Germany, France, the Netherlands, the UK (if we can still count it)?
Regarding Tesla, how will the Tesla Model Y rollout go? And will the Model 3 see continued growth, some cannibalization from the Y, production and sales stability (post-production lockdown)?
Are there other giant EV stories that should be mentioned here, or that even sit above these two hot topics?
Lastly (for now), are we at a tipping point in the auto market that’s going to see EV awareness an order of magnitude or so higher at the end of 2020 as it was at the beginning?
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