European battery electric vehicle (BEVs) sales might stutter a bit in 2023 but for the rest of the decade there will be seamless, accelerating growth, forecasters say.

Expectations for the medium and longer-term are solidly in agreement that electric cars will win hands down over dying internal combustion engine (ICE) sales, not least because European Union (EU) rules virtually demand the abandonment of traditional power. The forecasts hide the possibility of major controversies as Chinese carmakers win valuable market share. The EU may seek to protect the European auto industry if Chinese inroads become destructive.

China will continue to lead the world’s BEV growth, while U.S. sales will burst through 1 million to 1,300,000 this year, GlobalData said in report.

Tesla’s aggressive price cuts will pressurize traditional U.S. and European manufacturers who might have been looking forward to a cosy environment of easy money as BEV demand exploded. The Chinese competition will surely take this in stride in Europe.

Tesla will be the biggest seller of BEVs in 2023 with world sales of 1.6 million, closely followed by China’s BYD (1.58 million) and SAIC (1.01 million). The top European will be Volkswagen in 4th place with its own VW brand, Audi, Skoda, Porsche and SEAT subsidiaries with 840,000 BEV sales, according to GlobalData.

Tesla sold 1.31 million BEVs in 2022, up from 940,000 in 2021. Tesla has said it will sell 2 million in 2023, according to French automotive consultants Inovev.

GlobalData said worldwide BEV demand will jump 41% to 11 million in 2023 with China still leading, but its growth slowing a bit.

That’s on the high side, according to Germany’s Center of Automotive Management (CAM), which reckons 10 million is more likely. CAM also worries that Chinese expansion into Europe will pressurize German manufacturers.

“The situation for German automobile manufacturers is worrying. Volkswagen, BMW and Mercedes Benz are increasing their electric sales, but cannot keep up with the pace of market leaders like Tesla and BYD. Unlike Tesla and Chinese manufacturers, German carmakers have to struggle more with supply bottlenecks and the fundamental market ramp-up,” CAM said in a report.

European BEV sales will grow relentlessly through 2030, although Schmidt Automotive Research expects sales will stagnate in 2023.

GlobalData said European BEV sales will hit 2.1 million for a market share of 15.2% this year, reach 4.4 million in 2025 for a share of 25.7%, and 10.9 million (57.8%) in 2030.

Al Bedwell, analyst at LMC Automotive, a GlobalData company, said BEV demand will continue strongly through 2023.

“We think that there are a lot of BEV orders in the pipeline that will dictate the pace in Europe well into 2023 – some (manufacturers) have said that this is the case and buyers in 2022 were quoted waiting times of up to a year in some cases. The issues of affordability and underlying demand are going to come to the fore at some point, maybe in the 2nd half of 2023, and these will be a headwind to deliveries,” Bedwell said, answering email questions.

“We may be optimistic but I think the reservoir of buyers who have private space for home charging and are not unduly impacted by the economic downturn, and may still have lockdown savings, remains significant. Equally, many (manufacturers) can afford to support BEV prices somewhat as Tesla has done using the decent profits they have made by their enforced focus on high-margin vehicles during the height of the chip crisis,” Bedwell said.

Schmidt Automotive Research said BEV sales growth in slightly smaller Western Europe slowed in 2022 and will stagnate in 2023 at around 1.6 million and a market share of 15.1 %. Sales will surge to 2.7 million in 2025 (20.0% share) and on to 9.2 million (65.0%) in 2030.

Western Europe includes all the big markets of Germany, Britain, France, Italy and Spain.

In 2022, sales of all sedans and SUVs in Europe, defined as the European Union, EFTA and the U.K., reached 11.8 million, according to the European Automobile Manufacturers Association (ACEA). Western Europe was a bit smaller at 10.6 million, ACEA said.

Schmidt Automotive Research’s Matt Schmidt said sales in 2022 were inflated by buyers in Germany rushing to grab government subsidies before they expired in 2023. Schmidt also said EU CO2 rules don’t tighten again until 2025, so the pressure on manufacturers to sell more BEVs to meet targets eases a bit until then.

Tesla has made sure its fellow BEV makers won’t be able to sit back on their laurels as sales accelerate when it announced aggressive price cuts of up to 20% earlier this month.

Having instigated this move, investment bank UBS said Tesla is best placed to benefit from it.

“Given Tesla’s cost structure advantage over most of its competitors, we expect Tesla to be better positioned than other (manufacturers) to master this phase of price declines and even a potential industry shake-out. We see global legacy OEMs (traditional auto manufacturers) struggling the most to run a profitable EV business against this backdrop,” UBS said in a report.

Schmidt said Tesla’s price cuts were designed to mitigate the impact of government subsidies being removed.

“The reduction in Tesla prices is highly likely due to it having to fill the gap in many markets that have either seen BEV subsidy reduction such as Germany and forcing the models into a lower price category to retain some of those subsidies and effectively soak up some of those lost subsidies itself. In Sweden and the UK where subsidies were reduced to zero last year, Tesla needs to cover the costs of some of these lost subsidies to entice a market that is become ever so more price elastic under the current economic conditions,” Schmidt said in an interview.

Predictions of a relentless acceleration of BEV sales in Europe hide the prospects of much market turmoil. Chinese manufacturers are cranking up a major assault, mainly in the mid- section of the market but there also attempts to unsettle the German premium leaders. As 2030 approaches and electric cars become almost mandatory because of EU CO2 rules set on outlawing ICE vehicles, car buyers with average incomes will need to find cheap entry-level electric cars. European manufacturers show no sign yet of being able to meet this demand. Unless they do, expect political pressure to curb the threat from China with big tariffs, and popular pressure to think again about the overall drive to Net Zero CO2 by 2050.


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