European EV investment rockets

European car-makers are closing the investment gap on China when it comes to sums invested in EV manufacturing.

With €60 billion invested to produce EVs in Europe last year – more than three times the investment in Chinese manufacturing – 2020 and 2021 are set to be a tipping point.

According to new research by Transport & Environment, the investment is focused on eight EU countries, with Germany getting €40 billion – mainly from the Volkswagen Group and Tesla at its new factory near Berlin. Second to Germany comes the Czech Republic with €6.6 billion thanks to another sizable investment from Volkswagen.

According to T&E researchers, global automakers’ investments were focused on China until recently – thanks to a more favourable incentive regime. But changes to the state incentives plus the requirements to dramatically reduce fleet emissions in the EU triggered the investment surge.

Before the Coronavirus pandemic, sales of EVs were soaring in Europe and rising 80% in the last quarter of 2019 to reach a market share of 4.4% in that fourth quarter alone. In March France reached 12% market share for EVs, four times more than the same month last year, Germany hit 9.2% and the UK 7.3%.

T&E believes EV production will suffer less than conventional ICE production in the wake of the pandemic. Volkswagen’s Zwickau factory – where the new ID.3 electric car is being made, was one of the first on the continent to restart production last month and T&E is predicting that manufacturer will receive additional incentives to ramp up EV production as part of a Europe-wide recovery package.

T&E researchers also predict company car fleets will drive increased sales of EVs during the recovery from the pandemic and calls on the EU and individual countries Governments to incentivise fleet sales of EVs.

Report author Saul Lopez, electric mobility manager at Transport & Environment, said: “Let us not waste the opportunity to use public investments to step in to keep shaping the future automotive industry in Europe and build a zero emissions transport system, instead of supporting a business as usual scenario with an obsolete model with soon-to-be-stranded assets. Let us not allow coronavirus to kill the electric car.”