Pwc Strategy&: German OEMs under pressure in China's BEV market

The global registrations of Battery Electric Vehicles (BEVs) more than doubled from 2 million in 2020 to 4.5 million in 2021, according to the results of the current "Electric Vehicle Sales Review" by PwC Autofacts and Strategy&, PwC's strategy consulting group. The analysis evaluates registration numbers in 14 select markets worldwide. Automakers have enjoyed varying levels of success by region, the analysts note. More than eight out of ten of the best-selling BEV models in China and the USA last year came from either an Asian or American manufacturer. In the global race for BEV market share, German brands recorded a slight decrease in the fourth quarter of 2021, with 14% of electric vehicles compared to 17% in the same quarter of the previous year.

"The different access to semiconductors reveals geopolitical dimensions. Asian manufacturers, in contrast to European and German OEMs, have generally fared better through the crisis. Only one in three pure electric vehicles sold in China, Europe, or the USA carries a European brand," states Felix Kuhnert, Partner and Automotive Leader at PwC Germany.

According to him, the upcoming months in these new segments will be decisive. More and more automakers see a future in pure electric vehicles. In significant markets such as China, it is now a matter of European OEMs building on the success of combustion engines, defending, and possibly even expanding market share. This can only be achieved through sufficient product availability, Kuhnert continues. Recapturing lost market share later would be a costly and challenging task.

BEVs are generally on the rise

The number of BEV registrations grew by 72.4% in the top five EU markets in 2021 compared to 2020, and even by 83.3% in Germany. The e-mobility leader China continues to forge ahead with BEV growth of 172.3% compared to 2020. The BEV market in the United States shows promising signs of growth. Thanks to some popular models, BEV sales here increased by 62% compared to the previous year. Although there are global plans to reduce subsidies for electric vehicles, the Chinese government announced a 30% cut in electric vehicle subsidies this year. The UK has already cut electric vehicle grants for the second time, and in Switzerland's canton of Valais, support for hybrid vehicles has been completely discontinued.

"The new federal government has extended the current subsidy by one year but plans to tighten requirements thereafter. Thus, the subsidization of private wallboxes is likely to be discontinued," the consultancy predicts.

France has also extended the current incentive programs but only until July 2022. The "Build Back Better" bill by US President Biden, which includes a tax credit for electric vehicles of $12,500, has yet to find a majority in Congress. However, the phasing out of government subsidies is not expected to lead to a slump in BEV sales, according to Jörn Neuhausen, Director at Strategy& Germany.

"The BEV market is increasingly growing on its own, driven by a steadily growing range of models and manufacturers combined with further technological advances that will enable further cost reductions and performance increases by 2025. The ramp-up of battery cell production in Europe is a bright spot; at the same time, preparation with appropriate expertise from the automotive industry is crucial," Neuhausen continues.

The distribution of different electric drives still varies significantly by region, according to the analysis. In Germany, a shift in market share is emerging. While the full hybrid still dominates with a 16.4% market share (full year 2021), the up-and-coming BEV has now moved into second place (13.6%) and more than doubled compared to the previous year (6.7%). The plug-in hybrid had a market share of 12.4% in 2021. In total, 42.4% of newly registered electric vehicles currently stand against 57.6% combustion engines. In 2020, the ratio was 24.7% (EV) to 75.3% (ICE).

"By mid-2022, parity is expected in Germany, and by the end of this year a clear overtaking of combustion engines is anticipated," the analysts predict.