With the current market conditions, there is a lot of focus on fully electric vehicles (BEVs) specifically and why they are not selling. The easy answer is that people don’t want BEVs due to the charging infrastructure, resale value concerns at the end of their PCP term, and battery capacity replacements (in 10+ years time). At IEVA, we agree that there are concerns here and that these are topics that should not be ignored. However, when you look at where we are now and what’s happening, it’s a bit more complicated than just that. So, let’s dive into this and give it a good look.
For Q1, VW group (VW, Skoda, Cupra, Audi and Porsche) passenger vehicles reported a 3.3% drop in deliveries of BEVs year to date due to market-related factors and parts supply shortages, but notes that demand for BEVs has doubled in their future outlook, a very welcome sign. In Ireland we have seen a close to 37% reduction in deliveries for the first four months of the year, showing a disproportion drop in BEV sales in Ireland for the VW group versus the rest of Western Europe and the World. Taking Ireland’s best selling BEV in 2023 the Volkswagen ID.4 and so far this year it is down a whopping 63% for deliveries. The VW group has a supply constraint issue, largely due to the 2024 changes of the MEB platform that has seen the updated motors causing production stoppages and thus hindering delivery and sales. This shows that what is happening in Ireland and our BEV sales for the VW group is more than just demand driven, it’s a supply issue. The other half of this, is that BEV sales are being balanced out by the growth of 168% of plug-in hybrids (PHEVs) for the group, which are approaching 100kms of all-electric range according to VW.
Looking at BMW Group as the other major European manufacturer in the top 10 models sold in Ireland, we can see that it is a tale of two halves with its two brands, BMW and Mini. BMW is down just under 25% for BEV, with Mini dropping a significant 91%. Comparing this to their PHEV offerings, BMW has an almost 80% growth versus a 90% reduction for Mini. Looking at the Mini brand first, we can see the end of production of the existing Mini Cooper SE at Oxford. The New Mini electric comes from China now, which we will cover below as to what’s happening there, but this is a case of cars just not being there to sell. Originally the Mini Oxford site was planned to start production of the electric Mini models by 2030, but this has been pulled into 2026, in part due to supply issues with the new model from China. Looking at the BMW brand we can see that just over 70% of all vehicles sold this year with a plug, a significant statement to where they are at. With the BMW group reporting a 14.7% increase on BEV sales in 2023 and a statement that all-electric drivetrain systems are their biggest drivers and a growth project of >50% BEV by 2030, we don’t expect sales to remain low, especially with BMW’s NEUE KLASSE being the centre of their strategy.
Moving to car models produced outside of Europe, and an area where people don’t realise just how much is actually happening outside of Europe for vehicle production and the impact on supply here. Shipping of vehicles from Asia is being hindered from Red Sea security problems as reported by the Financial Times in January, adding over 25% to the normal voyage time of these ships which are already at full capacity before these ships were rerouted, hindering delivery of vehicles from China and other Asian countries to Europe. This additional voyage time comes post a time where we have seen roll-on roll-off ships scrapped after a time of low demand, and leading into a time of increasing vehicle demand. Current roll-on roll-off ship building demand is up, but with a 2 to 3 year lag on ship building it will have an impact on supply for a number of years to come, especially with 1 in 4 electric vehicles coming from China alone and this being expected to grow despite any tariff concerns.
The winner here is BYD due to their foresight to build their own car-moving ships and have landed straight in as the fourth most popular electric vehicle brand in Ireland this year, growing close to 4000% (that’s not a typo, there are three zeros) with MG and Volvo both growing significantly as well. We see reports of oversupply of these EVs in China being a reason for these vehicles being shipped to Europe, but China has surpassed 50% of new cars sales being electric (plug-in and fully electric) for this year, beating the original projection of 2028 for when this would occur. Again this goes against the narrative that people don’t want electric vehicles and shows that people are making the switch to vehicles with a plug.
We see a drop however in the fully electric segment for Hyundai, Kia, Nissan and Toyota, with significant reduction in sales, which can be in part attributed to lack of ability to ship vehicles to Europe. Only Hyundai and Toyota have an increase of sales for plug-in hybrid vehicles, with Kia seeing a loss of sales as well in plug-in hybrid, with Nissan not having a plug-in hybrid model.
Other than the brands mentioned above, the only electric other brand in the the top ten to talk about is Tesla. Overall Tesla sales are down 6.8% this year. The refreshed Model 3 has landed, and with this sales are up a significant 150%. Tesla’s losses are coming from the extremely popular crossover segment that contains the Model Y with a 49% reduction in sales here. This is in part to the upcoming Model Y Juniper facelift due later this year and people possibly waiting for this before ordering, with existing stock being sold while the new model is being prepared for release. There are reports of delays to the Juniper update, so we won’t know just yet as to how this will land with sales over the coming few months as to whether production and people will continue to buy the existing model, or wait for the next gen to come.
Well, it means that it’s a much more complex situation than it looks on the surface for new car sales of BEVs. Yes, we see the concerns around the charging infrastructure and the growth seen here. From our work, we can see that the growth to come is significant in the next 12-18 months, and with the AFIR directive having come into force we need to have a 3x increase to meet the requirements as set out by the EU for 2025. ZEVI have delivered half of the National EV charging strategy, with only the En-route charging document in place and the Destination and Neighbourhood charging document to come. This we hope will give structure to the work needed here, one that we will continue to monitor.
Battery replacements have been repeatedly debunked and put to bed, we even wrote about it this month that with the latest research on battery replacements and from this in Ireland our estimations show that less than 0.3% of BEVs on the road have had a battery replacement outside of any recalls. The other main concern is that of battery health and there are tools such as those provided by AVILOO that are already here in Ireland to help give confidence to the battery health, and thus resale value of a second-hand car.
With that, resale values are of concern, with large depreciation being reported in some cases. This has been a combination of where EV pricing has come from to where it is now. For those who bought over 2 years ago, many have seen the price of their vehicle’s list price drop for a new model, in some cases by tens of thousands of euros. This means that their more expensive purchase has a depreciation rate that comes from a new, less expensive price point for the same model and not what they paid for it. This is a tough situation to be in. We have seen a tough market across all fuels types in the past few years however due to a correction from the overpriced market post-Brexit and the pandemic restrictions, EVs are on the tougher end of this due to these pricing shifts. We expect this to continue for the next while, just not anywhere near to the level as seen in the past year. The glimmer of hope here is that BEVs are now approaching price parity to their ICE equivalents, and in some cases have already significantly undercut them. All of this will lead to more affordable EVs in the first instance, and for a second-hand market to grow with affordable offerings.
The answer is, it’s complex and there are a lot of factors influencing sales. The current media narrative adds to this and can be seen to be particularly negative around and to EVs. This is mainly due to lack of understanding and the continued use of debunked myths, ones that are continued to be used out of misunderstanding in the majority, rather than completely with malice.