Plugins EVs Near Third Of Autos In Germany, Recession Forecast

Plugin electric vehicles (EVs) gained 32.4% of Europe’s largest auto market, Germany, in October, up from 30.4% YoY. This in the context of overall auto market growth of 16.8% YoY, to 208,642 units. This, however, is still down by almost 25% from the pre-2020 seasonal norms. The Fiat 500 was October’s best selling full electric.

October’s combined plugin result of 32.5% comprised 17.1% share full electrics (BEVs), and 15.4% plugin hybrids (PHEVs). These compare with 17.1%, and 13.3% a year ago. We see that BEVs haven’t grown share YoY, whilst PHEV share did — a reversal of fortune from what we have seen in recent months.

In volume terms, BEVs grew by some 17% YoY, to 35,781 units, though this was only enough to match the broader auto market volume growth. Doing better, PHEVs grew volume by some 35% YoY.

PHEVs’ come back is only illusory though — it’s coming from pull-forward sales, because Germany’s purchase incentive for PHEVs (which can amount to €6,000 or more per vehicle) is being cancelled at the end of this year. We can thus expect to see their share drop dramatically from January 2023 onwards.

Combustion-only powertrains saw their combined share again below 50% of the market in October, for the second consecutive month. Expect to see this again in November and December.

Best Selling BEVs

The ever popular Fiat 500 took the #1 spot for best selling BEV in October, following on from its previous wins in June and January. Volkswagen’s ID.3 took second, and the ID.4/5 took third.

Other stand outs were the Opel Mokka in #6, with almost 50% greater volume that its previous monthly best, and the same relative month-on-month growth was seen by the Renault Megane, and Polestar 2.

Outside the top 20, the new MG4 saw strong growth, going from its initial 98 units in September, to 433 units in October. Its sibling the MG Marvel R also hit a personal best with 287 units, almost twice its previous record (set just last month).

The new Nissan Ariya also continued to steadily climb, to 189 units in October, building on its initial 116 units last month.

Let’s take a step back for the wider picture:

Over the trailing quarter, Tesla took the top two ranks. Model Y was far in the lead, thanks to its local Grünheide production ramping and being directed to the German market.

Here are the Augsut-to-October main climbers, compared to the May-to-July period:

• Tesla Model Y up from 7th to 1st
• Tesla Model 3 up from 26th to 4th
• Seat Cupra Born up from 14th to 6th
• Opel Mokka up from 17th to 9th
• Renault Megane up from 21st to 17th
• MG MG5 up from 45th to 19th
• Polestar 2 up from 31st to 20th

Conversely, some BEV models dropped position:

• Fiat 500e down from 1st to 4th
• Opel Corsa down from 3rd to 18th
• VW e-Up! down from 5th to 16th
• Hyundai Kona down from 6th to 11th
• Renault Zoe down from 15th to 24th
• Renault Twingo down from 18th to 26th
• Smart Fortwo down from 20th to 32nd

Let’s now turn to the relative performance of the auto manufacturing groups over the past 3 months:

Thanks to its breadth of popular models (7 in the top 20), Volkswagen Group still has a firm lead in the rankings, which it has held throughout 2022.

Tesla had a relatively weak May-to-July (only taking 7th), due to production pauses in Shanghai, but has now soared back to 2nd place, with 5x the volumes.

Most others have been pushed down one spot by Tesla’s resurrection, though keeping their relative rank, with Stellantis knocked down from 2nd to 3rd.

There was close competition at the back of the pack, with SAIC just marginally stepping past Geely to take 8th spot. Both are growing strongly — they have each increased their volume by over 3x since the May-to-July period. Excepting Tesla, the others in the chart have barely grown volume at all over the same period.

Outlook

With annual inflation of 10%, amidst other woes, the German government is forecasting a recession in 2023, mainly caused by high energy prices, and thus the reduced cost competitiveness of industrial output.

The leaders of Germany’s world-renowned auto industry (including VW’s Blume, and BMW’s Zipse) are well aware of these headwinds. They have been joining other industrial figures, and German Chancellor Olaf Scholz, in a recent visit seeking to increase production in, and economic ties with, China, Germany’s largest trading partner for the past 6 years.

The China market represented more than a third of the global sales of VW and BMW last year.

BMW’s CEO, Oliver Zipse, told Xinhua news that “We see tremendous potential in continuing to build strong ties and foster cooperation between China and Germany… China has established one of the world’s most comprehensive industrial bases and supply chains… and will remain one of our most strategically important markets” (Oliver Zipse, BMW CEO).

Hopefully for Germany this response to headwinds at home does not represent a permanent de-industrialization trend of Germany’s economy, including the auto industry. We will have to keep an eye on this situation.

Increasing energy prices, and more general inflation, are likely to make German vehicle buyers ever more conscious of running costs, and increase relative demand for BEVs.

This means that – whether supply volumes can keep up or not – the market share of plugins should continue to steadily increase over time. Recall though that we will see a drop off of PHEVs in early 2023, for the reasons discussed above.

What are your thoughts on Germany’s auto industry, and the prospects for the EV transition? Please join in the discussion in the comments section below.