Sweden saw a plugin electric vehicle market share of 37% in March 2021, up from 27.2% in March 2020. Plugin hybrids gained share from a last minute pull-forward in March, ahead of a policy change from April 1st which now more strongly favours full electric vehicles, and further penalizes carbon emissions.
The combined plugin result of 37.0% was unusually skewed towards plugin hybrids (PHEVs) at 31.5%, with full electrics (BEVs) contributing just 5.5%. This 6:1 ratio in March is a large divergence from the more recent ~2.5:1 ratio seen over the past year, due to imminent policy changes that made March a ‘last chance’ for buyers to benefit from relatively strong incentives for PHEVs.
Incentive Policy Changes
From April 1st, PHEVs now have their incentive cut from a previous range of €2,000 to €3,900 (depending on emissions) down to a range of €1,250 to €2,800 going forwards. That’s a loss averaging around €1,000 per vehicle, so caused a last minute pull-forward of PHEV purchases prior to the change.
BEVs, by contrast, are now gaining an additional ~€1,000 of rebate from April 1st, so saw a hold-back in March, waiting for the more generous incentives to come into effect. The total rebate for BEVs now stands at up to 70,000 SEK (€6,800), up to a maximum of 25% of the vehicle sticker price.
Effectively these changes mean that there’s now a €2,000 re-weighting between PHEVs and BEVs, resulting in BEVs getting relatively more attractive from April 1st onwards.
Additionally, substantial annual taxes (levied for the vehicle’s initial three years) for vehicle carbon emissions have also become more costly. These changes make all vehicles with emissions below 90 grams/km relatively more attractive than previously, and vehicles with emission above this threshold relatively more expensive.
High emitters like combustion sports cars, and large-and-heavy combustion vehicles, are especially penalized, with an additional 3-year tax cost amounting to around €5,000 for a 230 g/km vehicle like the non-hybridized Volvo XC90. And that’s before the additional costs of actually paying for the fuel for such vehicles. Effectively these taxes help tilt the cost-of-ownership playing field in favour of plugin powertrains. And, no surprise, there’s a PHEV version of the XC90 already, and a BEV version coming next year.
Sweden’s vehicle policy changes are not over yet however. Changes to company taxes for vehicles are still in flux, and will only bite after July 1st, so it will take a while longer for the dust to settle on the new landscape of the auto market. There may be a few more anomalous pull-forward and hold-back effects between now and then. Industry body, BIL Sweden summarized the position thus:
“During March, new registrations of plug-in hybrids increased by almost 212 percent while electric cars decreased by 13 percent. The two-part picture among the rechargeable cars is explained by the government’s adjustments within the Bonus-malus system. As of today, the bonus for plug-in hybrids will decrease by an average of SEK 10,000, while the bonus for electric cars will increase from SEK 60,000 to SEK 70,000. These changes have largely contributed to the plug-in hybrid customer choosing to bring forward their purchase, at the same time as the electric car customer has waited to receive the bonus increase. … On 1 July, the [company] benefit tax will also be raised, which means that we will not be able to see the real effects of the policy changes in the new registrations until the second half of the year at the earliest.” (Mattias Bergman, BIL Sweden)
Best Selling BEVs in Q1 2021
The Tesla Model 3 was the only BEV to get close to the best selling PHEVs in the first quarter of 2021, with 1,357 registrations, up in volume by around 10% year-on-year:
These BEV rankings have been relatively stable over the past year, with the exception of the Polestar 2, VW ID.3 and Volvo XC40 joining the list. The VW ID.4 is also now delivering in growing numbers in Sweden, having appeared in February and already gained the #6 spot in March. Will it become a regular member of the top 3 in the coming months?
For volume comparison, the top 3 selling PHEVs, the Kia Ceed, Volvo XC60 and Volvo S/V60 saw first quarter registrations of 2671, 2493 and 2470 respectively, each around twice the volume of the leading BEV. The Tesla Model 3 would have (almost) competed for the 6th position for plugins overall. As we noted above however, the weighting between BEVs and PHEVs is now changing and will become clearer after July 1st.
What are your expectations for the rebalancing of PHEVs and BEVs in the second half of 2021? Will we see a shift from the recent 2:1 and 3:1 ratios of 2020 and back to the more even balance of previous years? Or will BEVs perhaps now pull ahead, as we see in neighbouring Norway? Will the VW ID.4 take the top spot from the Tesla Model 3 later this year (or will the Tesla Model Y overtake both once it appears)?
Please share your thoughts in the comments.