Whatās Going On Here?At least this is one craze that seems to be hanging around: fresh data showed electric vehicles (EVs) represented 15% of Europeās total car sales last quarter. What Does This Mean?Itās true that there was a slight drop-off in EVsā market share last quarter from the quarter before, but that doesnāt tell the whole story. For one thing, the quarter before saw manufacturers rush to ship EVs that would meet newly introduced stricter emissions rules. And for another, EVsā market share last quarter was still double what it was at the same point the year before. That continued growth might come as a relief to traditional carmakers, which have spent a lot of money on electrifying their fleets ā and a lot of energy convincing investors that the extra costs will be worth it in the end. Why Should I Care?The bigger picture: China isnāt invincible.
Europe overtook China as the biggest EV market last year, and thatās a title the regionās expected to defend in 2021. Germany, France, and Italy, after all, boast generous subsidies, while Volkswagen ā the regionās biggest carmaker ā is slated to release a whole host of new EV models. Speaking of, Volkswagen has its eye on a title of its own: the German giant became the top EV-maker in Europe in 2020, and now itās aiming to usurp Tesla as the global leader by 2025.
For markets: Tesla has tough days ahead.
Carmakers earn regulatory credits on every EV they sell, but legacy carmakers havenāt traditionally sold enough to stay compliant with emissions rules. Tesla, meanwhile, has more than enough, so it sells them on. And since they donāt cost the company a thing to produce, the admittedly small revenue tends to disproportionately boost the carmakerās profits. But thereās trouble ahead: the more EVs traditional carmakers sell, the fewer regulatory credits they need from Tesla ā which could hit the carmakerās bottom line (tweet this). | 