Although Tesla is the undisputed king in the global EV market, the automaker has encountered much resistance in Europe this year. As of 3Q20, Tesla’s share in the all-EV market in Europe fell by 20% YoY, its throne usurped by Volkswagen and Renault.
As EVs underwent a rapid surge in sales in 2020, Tesla no longer possesses market leadership in Europe, while its market share plummeted from 33% in 3Q19 to 13.5% in 3Q20, behind both Volkswagen and the Renault-Nissan-Mitsubishi consortium, as aforementioned.
As of 3Q20, Volkswagen sold 87,000 EVs for the year, while Renault trailed closely behind with 83,000 units. In comparison, Tesla took third place with 63,000 units sold; this figure also represents a 12,000 unit drop YoY.
Although many readers will not care much for these so-called “Tesla killers”, Volkswagen ID.3 and ID.4 both match up favorably against Tesla Model 3/4. On the other hand, Renault’s diminutive all-electric Zoe remained peerless among EVs with short driving range and sold like hot cakes in France, Germany, and Northern Europe.
▲ While Tesla has stopped growing within the past 12 months, its competitors have quickly caught up (Source: Schmidt Automotive Research)
Incidentally, as Taiwan lacks a robust public charging infrastructure for EVs, especially DC charging stations, Tesla outshines all competitors in the market. On the contrary, various governments in Europe have made a push for such infrastructures, giving consumers much more freedom to pick from the gamut of EVs on offer.
Tesla’s other major challenge this year is the EU’s increasingly stringent emissions standard, which has prompted various automakers to make a push to sell their own EV models. The key implementation of this standard is the so-called “super credit” mechanism.
EU’s carbon emissions standards stipulate that all automakers must achieve an average emission below 95 grams per kilometer across their lineups before 2021. Failing to do so would result in a fine of €95 per gram exceeded, multiplied by the number of total cars sold by the automaker in question that year. However, in an effort to promote an industry-wide transition to EV manufacturing, the EU has also instituted a super credit mechanism which stimulates that for each car sold that has a carbon emission lower than 50 g/km (generally HEVs or BEVs), said car can effectively count as two cars in the calculation of the automaker’s average yearly carbon emissions. In other words, every BEV sold can compensate for about 4 fossil fuel vehicles for the purpose of calculations.
For a company that sells as many cars as VW does, EVs remain the key to staying under the emissions cap, in turn compelling the automaker to focus on EV and HEV sales at full bore. The sales performance of EVs represents not only market share or revenue gains for a company like VW, but, more importantly, a means to stay under the carbon emissions cap.
Based on the latest European market data, if Tesla’s made-in-China Model 3s are able to massively boost the company’s sales in 4Q20, Tesla may stand a chance at repeating last year’s sales of 110,000 units, but beating this figure appears doubtful, primarily because of the poor reception of the high-end Model S/X in Europe. Betting on Model 3 as its sole trump card will unlikely be a winning formula for Tesla in the European market given the legions of competitors.
Tesla is expected to place its hopes on the Gigafactory Berlin-Brandenburg next year and on the European release of the Model Y. However, progress at the Gigafactory will likely be hindered by German governmental regulations and competition from other automakers, while Tesla’s competitor in the EV space, VW, has already released its ID.4 ahead of time and beat Tesla to market. Of course, a hypercompetitive market, while precarious for automakers, is most beneficial for the consumer in the long run.
(Source for cover photo: Tesla)