Sweden’s Plugin Growth Catches Its Breath After Recent Pull-Forward

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Sweden’s plugin electric vehicle share in January was 52.4%, flat from 52.9% year on year. The temporary pause in growth comes after a pull-forward in December. Overall auto volume in January was 35,476 units, some 27% down from January 2022. The best selling full electric was the Volvo XC40.

January’s combined plugin share of 52.4% comprised 28.9% full electrics (BEVs), and 23.5% plugin hybrids (PHEVs). This compares to respective shares of 52.9%, 25.9%, and 27.0% a year ago; thus BEVs are still steadily replacing PHEVs in share.

With plugless hybrids (HEVs) also seeing a slight YoY growth in share, combustion-only vehicles were squeezed, and continued to lose share.

In volume terms, all powertrains except the miniscule “other fuels”, lost volume year on year.

Murky Incentive Changes

January’s low ebb for plugins was said, by industry association Mobility Sweden, to be “a consequence of the high number of new registrations in December ahead of the reduction of the climate bonus from 1st January.” No further elaboration.

And so… I must admit to now being a bit confused. Based on several hours of previous research of Swedish reports (via machine translation), I had understood that the bonus cut had already been put in place — with immediate effect on 8th November 2022 — for any plugin order placed after that date, as I reported last month.

Now I find this throw away comment by Mobility Sweden, and – after much more digging – that the Swedish transport agency has since issued more correctives and attempts at clarification about the bonuses. They have recently said both that “from the turn of the year [Jan 1st 2023], the rules for climate bonuses will change,” and also that, “The climate bonus ends on the 8th November [2022].”

To their credit, the agency appears to realize the messaging is prima facie contradictory, saying “I understand that it can be perceived as contradictory when we go out and inform about changes to something that we previously announced has ceased to apply. That’s why this clarification feels urgent, says Jonny Geidne, qualified investigator at the Swedish Transport Agency.” Yet, the alleged “clarification” itself doesn’t actually provide any clarity — perhaps something is getting lost in translation.

At this point, I’d like to request any of our readers who are Swedish speakers, and have a very clear grasp of all the relevant incentives, and their recent changes, to kindly help me and our other readers to understand all of this. Please jump in to the comments section below, if you can decode what is going on.

Regardless, looking back from here at the data from recent months, we can now conclude that there was indeed a pull-forward effect on plugin registrations in November and especially December, from which January experienced a significant hangover. This explains the lack of YoY growth in January. Once we have more clarity on the incentive landscape, we might be able to foresee when things will normalize again (I will update this report if our community steps up).

Update: Two of our kind community members have pointed out that there are now overlapping rules in effect. Yes, the 8th of November ENDING of bonuses for new orders is still the most impactful one in the long run, but an earlier ruling from Spring 2022 had anyway decided to cut the AMOUNT of the bonus, coming into effect from January 1st 2023 (by roughly a third of its value). This applies to deliveries, rather than orders (different to the November 8th ruling).  So there was a rush by manufacturers to fulfil customer deliveries before the Jan 1st bonus reduction. Thus this was a supply side pull forward (should that be a “push forward”?), but a pull forward nonetheless.

This likely means that manufacturers will now effectively de-prioritise Swedish plugin supply for a while, although we can expect e.g. Tesla to still make a big push in March. I would expect plugin supply (and thus market shares) will return closer to trend by the close of Q2. However, November 2022’s “ending” of bonuses for new orders may start to be visible in Q3 and Q4 2023 (due to long waiting lists / delivery delays).

Over the next couple of years, the overall long term trend for plugin powertrains in Sweden will of course remain “up and to the right”.

Best Selling BEVs

While overall BEV volumes declined, the Volvo XC40 nevertheless retained its top spot in the charts, albeit at a quarter of December’s volumes. The Kia EV6 took #2, and the Volvo C40 took #3.

Only a couple of the top 20 BEVs increased their volumes in January compared to their recent averages. The Mazda MX-30 got close to its record volumes, with 178 units. It is now available in both the base battery-0nly model, and in a range-extender version (with over 50 miles / 80 km of electric-only range).

The new BMW iX1 saw 110 units in January, and should continue to grow from here (subject to adequate supply).

At the other end of the scale, both the Ford Mach-e, and Aiways U5, didn’t ship at all in January. All the Teslas were at the low end of their logistics wave, as were several other models that performed well in December (e.g. BYD Atto 3, Cupra Born, VW ID.5, and more). Again, many of these changes simply reflect temporary allocation reversals, after the pull-forward rush in December.

In terms of new faces, the BYD Han saw its first Swedish samples arrive in January (8 units), and the Nio ET7 also appeared for the first time (just 1 unit). Both are large sedans, around 5 meters in length, and decent value compared to segment rivals. We will have to wait a few more months to see what volumes they might achieve in steady state.

Let’s now step back and look at the trailing three month picture:

Continuing to dominate, the Volvo XC40 again took the top spot, a strong turnaround compared to its low ebb between May and August. The Volkswagen ID.4, the previous favourite, again had to settle for 2nd place. The Volvo C40 came 3rd.

Here are the significant climbers compared to 3 months prior:

The following models dropped rank:

Most of these changes are temporary, but the venerable (and still futuristic) BMW i3 is now finally phasing out everywhere except for Germany, where a modest number continue to be supplied (for now at least).

It’s somewhat ironic that — just as the most interesting 1st generation range-extended BEV is retiring — Mazda is coming forward with a new iteration of this format.

I still think that a BEV+Rex which has decent all-electric range (80+ km /50+ miles) which can be used fully independent of the ICE, is still a good compromise at this stage whilst global battery production capacity is still a limiting factor keeping ICE-only sales afloat. Three 20 kWh BEV+Rex vehicles in daily use with families and commuters are typically going to electrify a lot more KM driven than a single 60 kWh BEV plus two ICE-only vehicles. Later in life, on the used market, even with a potentially failing Rex engine, these can step into the role of local-duty BEV-only vehicles, for years into the future (much like early Nissan Leafs still do today).

When global battery production capacity is no longer a bottleneck, the calculus will of course be different. We are not there yet. BEV “purists” feel free to preach to me in the comments for this heresy 😉

Outlook

Obviously the Swedish bonus-policy changes mentioned above have temporarily disturbed the auto market, but the transition will doubtless settle back closer to long term trends in due course. I keenly await clarifications from our Swedish readers on what the “actual” changes to the incentives have been, and insights into likely near term market patterns. Thanks to the community members mentioned above for their help in clarifying the state of things.

Sweden’s wider economic landscape is also shaping the auto market. Mobility Sweden says that “Private customers are decreasing as a result of the economic situation and households’ reduced purchasing power… price increases on the cars, higher interest rates, and a reduced bonus for ordered cars… The increasingly difficult financial situation for households is contributing to a shift from private customers to business customers.” (Machine translation).

This reflects the Swedish economy having shrunk in Q4 2022, with the finance minister forecasting recession lasting into 2024, and inflation being at its highest rate in over 30 years (and climbing). Sweden isn’t alone here, as the UK and German economies are also now in (or entering) recession.

We will have to see how the economy shapes Sweden’s auto market and the EV transition. With the long term cost savings, I still expect plugin share of the auto market will grow this year, but partly because overall auto volumes are likely to be tepid.

What are your thoughts on Sweden’s auto market and EV transition? Please jump in below to join the discussion.

 


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Dr. Maximilian Holland

Max is an anthropologist, social theorist and international political economist, trying to ask questions and encourage critical thinking. He has lived and worked in Europe and Asia, and is currently based in Barcelona. Find Max's book on social theory, follow Max on twitter @Dr_Maximilian and at MaximilianHolland.com, or contact him via LinkedIn.

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