7 Overvalued EV Companies That Investors Should Wait on

Read The Full Article On: Morningstar

By Jack Denton 

Tesla delivered around 96,000 units to the key European EV market in 2020 

Sales of electric vehicles by European car makers accelerated rapidly in 2020 amid a pedal-to-the-metal push to increase EV adoption, with severe fines for car markers whose fleets don’t meet new emissions targets and generous incentives for buyers to trade in their gas guzzlers. 

The COVID-19 pandemic wrought havoc on car sales, with the European Automobile Manufacturers’ Association reporting that passenger-car registrations fell 25.5% in the first 11 months of 2020 compared with 2019. 

But electric vehicles have been a standout for automobile companies. 

Volkswagen reported on Tuesday that it delivered 212,000 electric cars world-wide in 2020, 158% more than in the year prior. Included in that figure is the delivery of 134,000 battery-electric vehicles, representing growth of 197% compared with 2019. 

Volkswagen also said that its ID. 3 model was the top-selling car in Sweden in December 2020 by absolute numbers. All-electric Volkswagen vehicles took the top spot in both the Netherlands and Germany, where they captured around 23% of each country’s battery-electric vehicle market. 

Mercedes-Benz-owner Daimler said on Jan. 8 that the brand sold more than 160,000 plug-in hybrids and all-electric vehicles in 2020, representing growth of more than 228% from 2019. 

Electric vehicles increased drastically as a share of all cars sold by Mercedes-Benz, from 2% in 2019 to more than 7% in 2020. 

BMW , which also owns Mini, said on Tuesday that the two brands sold a combined 192,646 electric vehicles in 2020 — an increase of nearly 32% from 2019. 

In France, Renault reported on Tuesday that it doubled its electric-vehicle sales in the European market in 2020, selling 115,888 vehicles and representing more than 100% growth from 2019. 

The company also reported that its total orders at the end of December 2020 were up by 14% compared with last year, which it put down to its new hybrid offerings. 

Also read:Renault says it will create French venture with Plug Power

Meanwhile, electric-car maker Tesla (TSLA) delivered 95,900 units to 18 European markets, according to data compiled from official sources by automotive analyst Matthias Schmidt

The 18 markets cover the European Union states, minus eight countries in Central and Eastern Europe, as well as Norway, Iceland, Switzerland, and the U.K. 

According to Schmidt, who publishes the European Electric Car Report (link), Tesla’s delivery volumes in the region fell by 12% in 2020, from 109,500 in 2019. 

This saw its market share of the key European battery-electric-car market more than halved — from 31% in 2019 to 13.2% in 2020. Tesla’s cars were overtaken in popularity by Volkswagen and Renault models. 

Much of the global growth in electric-vehicle popularity comes from Europe itself. According to a report from consulting firm McKinsey in July 2020 (link), Europe cushioned a broader, global fall in EV sales through the year. 

According to McKinsey, EV sales remained constant in China in 2019, falling by 57% in the first quarter of 2020, while EV sales dropped by 12% in the U.S. in 2019, and a further 33% in Q1 2020. In Europe, electric-vehicle sales in 2019 rose by 44%, and by 25% in the beginning of last year. 

European governments have added generous incentives for consumers to purchase EVs, with both Germany and France offering lucrative subsidies for car buyers who choose electric. 

In Germany, buyers can save up to EUR9,000 ($10,940) on purchases of new electric vehicles. France offered incentives of up to EUR7,000 in 2020, but will trim that down to EUR6,000 in 2021. 

Beyond meeting consumer demand, European car makers are also being pushed to manufacture more electric vehicles by the threat of hundreds of millions of euros in fines from the EU over binding emissions targets. 

Phased in through 2020, and continuing into 2021, the fleetwide average emission target for new cars must be 95 grams carbon dioxide per kilometer, which is around 4.1 liters of gasoline per 100 kilometers. 

According to Schmidt, it was the introduction of emissions targets, and the specter of massive fines, that accelerated the European car makers’ battle against Tesla for dominance on the continent. 

“With 2021 getting even tougher — thanks to the phase-in year ending — Tesla will come under even more intense competition,” Schmidt said. “Come 2025 when the targets increase again, Tesla will certainly be playing against fully-fit opponents and will potentially struggle.”

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