PwC Strategy& Analysis: Global Trend Towards E-Mobility Continues Despite German Slump

The global ramp-up of electromobility continues unabated despite the struggling BEV sales in Germany. This is shown by the „Electric Vehicle Sales Review“ by PwC Autofacts and Strategy&, PwC's global strategy consulting firm, which evaluates the new registration numbers in 20 selected markets worldwide. According to this, the global e-car market grew by 19% in the first quarter of 2024 compared to the same quarter of the previous year. This means it grew significantly stronger than the overall market, which saw an increase of 4%.

Due to ongoing growth, both battery electric vehicles (Battery Electric Vehicle, BEV) and plug-in hybrids (Plug-in Hybrid Electric Vehicle, PHEV) achieved record market penetration values for the first quarter. According to the study, the global market share of BEVs was 12%, while PHEVs reached 7%. While the electric transformation was recently driven primarily by BEVs, PHEVs and hybrids are now experiencing a second spring. In the first quarter of 2024, they outpaced purely electric vehicles with global growth spurts of 57% (PHEVs) and 11% (hybrids).

German BEV Market Collapses

Contrary to the globally stable growth dynamics, the German e-car market suffered a significant setback. According to the study, BEV sales in particular plummeted massively, shrinking by 14% in the first quarter of 2024. A look at the previous year's growth shows how much the German BEV market has declined. In the first quarter of 2023, BEV sales had still increased by 13%. Only the comeback of PHEVs and hybrids prevented the entire German e-car market from slipping into negative territory. PHEVs increased by 20%, while hybrids recorded an 11% growth.

The UK Overtakes as Leading Market

While the German electric car market is struggling, growth continues in other European markets. In France, BEV sales increased by 23% compared to the same quarter last year, and in the UK, 11% more BEVs were sold. With more than 84,000 BEVs sold in total, the UK has surpassed Germany, the previous leader. Due to the faltering German market and subdued BEV sales in Spain and Italy, more combustion engine cars were sold than electric cars in the five largest European markets of Germany, Italy, Spain, the UK, and France.

"European car manufacturers continue to be under pressure from multiple sides. On one hand, the electric transformation is stalling in important home markets, while at the same time, Chinese OEMs are attacking precisely there, which cannot be prevented in the long term, even with tariffs. European manufacturers can only counter with convincing vehicles," analyzes Felix Kuhnert, Partner and Automotive Leader at PwC Germany.

German car manufacturers in particular have now understood that they must not only defend the luxury segment but also score in the high-volume entry-level segment. For this balancing act to succeed, reliable framework conditions are needed. Only in this way can companies plan and master the technological transition, Kuhnert appeals.

Europe Threatened by Trade Deficit Due to Battery Cell Production

The most important driver of the global mobility transition remains unchallenged: China. According to a study, overall EV sales grew significantly stronger than the overall market with a 31% increase in the first quarter of 2024, while the total market grew by 6%. While pure electric cars recorded a 15% increase in sales, PHEV sales rose by 77%. In China as well, PHEVs continue to be the preferred intermediate solution for many on the way to e-mobility. This trend is even more pronounced in exports. PHEV exports skyrocketed by 160%, BEV exports rose by 7%, and total exports of all drive types grew by 33%. The export growth is a consequence of built-up overcapacities.

Utilization of Plants in China Below 50 Percent

While the utilization of Chinese auto plants was 62% in 2017, it was only 48% in 2023. The Chinese export flood affects not only electric cars but also precursor products for the growing battery cell production in Europe. For instance, the EU's trade deficit for lithium-ion batteries more than quadrupled from $4.7 billion to $20.0 billion between 2018 and 2023. As a consequence, Europe could shift from being a net exporter to a net importer of car parts and battery cells as early as next year, with a trade deficit of $37.1 billion. In the long term, this deficit could ease through battery recycling and closer European value chains in battery production.