Germany’s auto market saw plugin electric vehicles take 25.6% share in March, up modestly from 22.5% year on year. Against a declining auto market, full electrics grew in volume whilst plugin hybrids fell. Overall auto volumes were 241,330 units, some 17.5% down year on year, and some 31% down from the 2017 to 2019 seasonal average. Planned energy supply cuts risk hitting industrial production in the months ahead, including at Tesla’s new Berlin Gigafactory.
March’s combined plugin result of 25.6% comprised 14.3% battery electrics (BEVs) and 11.3% plugin hybrids (PHEVs). Germany’s favouring of BEVs over PHEVs has grown wider since first emerging in summer 2021, after a long period of fairly even weighting.
So far in 2022, PHEVs have consistently reduced in share YoY, and have even reduced their sales volumes. Ironically, the older technology of plugless hybrids (HEVs) have consistently grown their share (and volumes) this year, up 15.6% to 20.1% YoY to March. Is PHEV’s decline simply the continuation of the hang-over from December’s year-end rush to meet emissions targets? Or are PHEVs now falling out of favour, despite their overly generous €4,500 grant? Please comment below if you have familiarity with the current dynamics of the PHEV segment within the larger German auto market.
Meanwhile BEVs continue to grow share more strongly than every other powertrain (even HEVs), from 10.3% in March 2021 to 14.3% last month, a relative gain of nearly 40%. Volume increased more modestly YoY (15.4%), but in a strongly declining overall auto market, that’s still a good performance.
Diesels and petrols continue to drop in share, and in volume. Diesel’s volume dropped over 30% YoY, and petrol’s dropped 27%. Their combined share of the overall market dipped below 50% in November and December, and we can expect it to return there, and stay below 50%, from summer 2022 onwards. Here’s the chart of evolving powertrain share since late 2019:
The KBA has not yet released detailed model data for March. However, we do know that the Tesla brand sold 8,045 units in the month, almost all Model Y and Model 3. This is 1.33× the volume they sold in February, whilst the total BEV market has increased by 1.22×. Since the two Tesla were the most popular BEV models in February, and are even more heavily weighted in March, it’s safe to assume they are again the top sellers.
Keep an eye open for Jose’s fuller model report later in the month.
There’s mixed news for BEVs coming out of Germany. We’ve seen the first Tesla Model Ys produced by Tesla’s new Gigafactory in Brandenburg, being delivered to customers on March 22nd. Meanwhile, a decision has been made (or at least announced) by some European governments, including Germany, to drastically cut energy imports from Russia. Germany gets 50% of its natural gas from Russia, so there is a risk of major disruptions to the German manufacturing economy, since there are no viable substitute gas suppliers who can quickly make up the difference.
Just as one example, even Tesla’s new Gigafactory reportedly uses natural gas for 60% of its energy needs. When the gas supply gets cut in half, by government leaders deciding to turn off the Russian gas taps, in the coming weeks and months, German household energy needs (along with the needs of schools and hospitals) get priority. Industrial energy needs are the first in line to get cut off.
One of the political leaders in Brandenburg’s parliament, Benjamin Raschke, has said (machine translated) that “whether Putin turns off the gas tap, or the gas stop comes from the German side, then hospitals and schools will have high priority,” as reported by local news outlet, the Berliner Kurier. Households have “absolute protection.” Industrial manufacturing plants, like Tesla’s auto plant, the auto plants of all the big German manufacturers, as well as all other industrial manufacturers are, by law, “the first to shut down and have to do without.”
This would obviously spell disaster for the German economy, the industrial heart of Europe. The head of industry group, the BDI (representing industrial companies together employing over 8 million workers) cautioned that a short-term rush to entirely cut Germany’s energy supplies from Russia would amount to “sanctioning ourselves more than the aggressor“.
The EU policymakers’ idea of cutting off Russian energy imports seems to be — as voiced by the French finance minister — motivated by the desire to wage “all-out economic and financial war” on Russia. However, Russia itself is self-sufficient for economic essentials like food and energy. In Europe, pretty much only Norway is self-sufficient for most of its energy needs. By cutting off energy imports into Europe, big energy consuming nations, like Germany and Italy, might end up doing much more damage to their own economies than to Russia’s economy. This being the case, one wonders whether this strategy has been carefully thought through by European politicians.
There’s plenty of uncertainty at the moment. Obviously, with fuel prices going up steeply, the average consumer in Germany who still has the economic ability and desire to buy a new car in the months ahead will be considering BEVs more than they were previously. BEV demand relative to ICE demand will thus increase further. What will happen to BEV supply (and supply of most autos for that matter) is a big unknown at this stage, save for the possibility outlined above for Tesla’s new Gigafactory. On the current track that political leaders are taking, unless there’s a course correction, it seems inevitable that Germany’s overall auto production — Europe’s single largest industry — will take big hit this year.
What are your thoughts on Germany’s auto market prospects for 2022? Please join in the discussion below.