Electric vehicles still in the slow lane in CEE

Electric vehicles still in the slow lane in CEE
A BMW charging at GreenWay's Efacec Fast Charger in Senec, Slovakia. GreenWay has the CEE region's largest network of public EV charging stations.
By Clare Nuttall in Glasgow March 8, 2019

Sales of electric vehicles (EVs) in the European Union are lagging both China and the US, and EU member states in the eastern part of the bloc are well behind their western counterparts. 

A new report from environmental consultancy Transport and Environment (T&E), “Trump’s US overtakes the EU in electric car race”, reveals that in 2018 the US became the second largest electric passenger car market in the world, with 361,000 EVs sold during the year. The EU had a slight edge in EV sales for years, but was overtaken by the US in 2Q18, and sales surged by 120% in the US in the final quarter. 

This compares to 302,000 electric cars sold in the EU in 2018, while China remains the prime market for electric vehicle sales, with over 1mn sold during the year, including more than 150,000 in December alone. 

A breakdown by country shows a clear divide between the west and east of the European Union. The eleven largest EV markets within the EU are all member states from the western part of the bloc. They are led by Sweden, where EV sales reached 8% of total vehicle sales in 2018, followed by the Netherlands, Finland, Portugal, Austria and the UK. 

Hungary was the largest EV market from the eastern part of the bloc in 2018, and the only country from the region where EV sales exceeded 1% of total vehicle sales. The lowest proportion of EV sales across the 28 member bloc was in Poland, but sales were also minimal in Slovakia, Greece, Estonia, the Czech Republic, Lithuania and Romania. 

Holding back 

Looking at the reasons for the slower growth in EV sales in the EU, T&E writes that, "EU carmakers have been holding back EV sales to ‘save’ zero-emission cars right until the end to comply with stricter CO2 limits in 2020 and 2021.”

"EU carmakers have seen electric cars as a necessary evil to comply with regulation and evidence shows they've been suppressing supply and sales in 2018, in an attempt to protect their diesel business,” commented Lucien Mathieu, e-mobility analyst with T&E.

“Meanwhile China is racing ahead and even Trump’s America has now overtaken Europe thanks to the Tesla-fueled EV sales boom."

T&E claims that rather than ramping up EV production and adjusting their supply chains accordingly, European [original equipment manufacturers] OEMs are “shoring up the slumping EU diesel market” and have been reluctant to embrace the electrification revolution. Instead, “Diesel engines have been the cornerstone of their expertise and allowed them to have a competitive edge vis-à-vis US and Asian manufacturers.” Delays to new vehicle releases have also been linked to the change in the EU emissions test cycle. 

“The suppression of EV sales is apparent in carmakers’ limited model choice and availability. Market monitoring shows that seven all-electric model launches were recently delayed in Europe. This has led to waiting times of between six and 12 months for most plug-in cars,” the report says. “Carmakers also launched fewer new battery electric and fuel cell (ZEV) models in 2018 than 2017. Just seven were added last year, whereas 20 new models will be added in 2019, 33 in 2020 and 45 in 2021.”

In addition to Tesla’s much reported production issues, T&E points to other delays such as the Audi all-electric E-tron, whose first deliveries were delayed to March 2019, and Daimler CEO Dieter Zetsche’s announcement that the Mercedes EQC will not meet demand in 2019 and probably not by 2020, plus the delayed rollout of the Jaguar I-Pace, the Honda Urban EV and the Kia e-Niro. 

Regulatory drivers 

According to T&E, regulation is driving EV sales in all major markets: “The main driver of EV sales has been clean car policies in the world's three largest car markets,” it says. 

“EU carmakers currency don’t need to sell EVs, so they don’t make an effort,” says the report. “On the other hand … model availability will change radically from 2019-2020 onwards. This is because EU carmakers need to sell an estimated 5-7% plug-in models to meet the 2021 CO2 standard.”

By 2030, CO2 standards in Europe will require more than a third of car sales to be electric, and to meet 2050 climate goals, all sales would have to go zero emission in the early 2030s. “This is also why governments are trying Incentivise fully zero emission models, like battery electric cars, more,” says T&E. 

The report also identifies other positives in the European market, indicating good potential for sustainable long-term growth. Battery electric vehicles (BEVs) showed strong sales in 2018, and several launches of new BEV models are in the pipeline. Unlike the US, which is dependent on a single brand, Tesla, sales of EVs in the EU are much more diverse. 

“While Europe might have lost the 2018 battle, the race is still on,” says the report. 

A charged market

An issue examined by other industry observers is the availability of electric vehicle charging points. To date, the number of EV chargers has been much lower in Eastern European countries, holding back development of the market.

An earlier report from T&E, published in September 2018, finds that, “In western and northern Europe a basic minimum infrastructure is, or imminently will be, available to recharge the EVs … In Southern, Central and Eastern Europe the deployment of rechargers has been much more limited.” The smaller EV markets are expected to lag behind frontrunners by five to 10 years, despite plans in the draft European Commission budget for 2020-2027 to spend at least 60% of the EU’s cross-border infrastructure fund on schemes that help the fight against climate change.

While there were around 2,550 rapid charging sites installed on European main roads as of 2018, they are very unevenly distributed across the continent. Specifically, there are close to zero charging points per 60km of highway in the region from Hungary and Slovenia in the north to Greece in the south. “The lack of coverage in Hungary, Romania, Bulgaria and Greece is notable and needs to be addressed to enable EVs to be used EU-wide,” the report says. 

"Fast charging along corridors and highways is essential for drivers to complete journeys beyond the range of their vehicle. It also acts as a psychological safety net enabling drivers to travel longer distances and further from their usual charging location.” 

Still, there have been a series of investments into charging stations in the Central and Southeast Europe region. Slovakia-based GreenWay, for example, builds and manages EV charging infrastructure throughout CEE. The company plans to install a total of 145 fast charging stations in Slovakia and Poland. As of October 2018, it had largest EV charging network in the CEE region, with 113 public charging stations in operation from Slovakia to Poland. 

“Some are questioning whether CEE can handle the EVs if they come — and this announcement proves that we can,” said Peter Badik, co-founder and managing partner of GreenWay, in October. “GreenWay has built the core infrastructure providing comprehensive, trans-national coverage in Slovakia and Poland, as well as the backend IT and support services drivers need. We have many more plans. We will continue to add more chargers and constantly be innovating to make EV driving as seamless and comfortable as possible and provide excellent customer service.”

Polish petrol retailer PKN ORLEN, meanwhile, plans to roll out 150 fast charging stations across the country’s largest cities and on selected transit routes. ABB will to supply its latest multi-standard fast charger, Terra 54, to PKN ORLEN, which expects to complete the first phase of the project, with around 50 fast-charging stations, by the end of this year. 

In Romania, German retailer Kaufland Romania and Renovatio Group launched the first fast charging hub for electric cars in the country at one of Kaufland’s Bucharest stores in 2018. This followed Kaufland’s launch of the first electric car fast charging public stations network in Romania two years earlier, also alongside Renovatio. Mol and E.ON have also been rolling out EV charging stations in Romania. 

Adapting supply chains

As a centre for automotive assembly and components manufacturing, the CEE region is involved in the supply chains for the growing EV market. 

Czech Skoda Auto's first electric cars will be presented already this year: the Superb plug-in hybrid and Citigo electric. In 2020, the first serial models on MEB (Modularer Elektrifizierungsbaukasten) platforms will be produced, including serial version of Vision iV. Overall, the Czech car manufacturer plans to introduce more than 30 new models by the end of 2022, of which at least ten will electrified, said the chairman of the board of directors Bernhard Maier at the international Geneva Motor Show, daily online Hospodarske Noviny reported on March 4.

Hungary has had a series of recent investments into EVs. German carmaker Audi launched serial production of electric motors at its base in Gyor, northwest Hungary in July 2018, expanding its product portfolio. By 2025, the electronic version of all Audi models will be available, it was announced.

BMW's €1bn new plant in Hungary, its first new production facility in Europe in 20 years, will have capacity to turn out 150,000 conventional and electric vehicles annually from 2023. Hungary, along with other CEE states such as Poland and Slovakia, is an important centre for the automotive industry, where last year Audi, Mercedes, Suzuki, and Opel turned out a total of some 500,000 cars or some 2.8% of the 19mn cars manufactured in the EU. 

Also in Hungary, fellow German industrial group Robert Bosch announced a HUF14bn (€43.6mn) investment at its automotive industry factory in the northeastern part of the country. At the time of the announcement, in January 2019, the 200 millionth product was manufactured at the Miskolc plant, an iBooster electromechanical brake booster, which makes the motors of hybrid and electric vehicles more efficient.

Elsewhere in the region, Slovenia’s TPV, a supplier for the automotive industry, signed deals with Sweden’s Volvo in December to become one of the key suppliers of Volvo Cars in the field of electrification. The deals include the development and production of structural chassis and automobile bodywork with the function of supporting and protecting electric power.

ON Semiconductor opened a new, expanded product development centre in the Slovak capital Bratislava in 2017. Technology produced at the Bratislava Development Center will be incorporated into the powertrains of EVs, hybrid electric vehicles (HEVs) and conventional combustion engine cars to help improve fuel economy and safety levels. 

And there have also been investments outside of the main CEE manufacturing hubs. Chinese electric vehicles company Cenntro Automotive Corporation and its partners from Luxembourg and Bulgaria will invest €10mn in an assembly plant to produce electric utility vehicles in the Thracian economic zone near the city of Plovdiv, daily Dnevnik reported back in July. 

Belarus and China are also in negotiations over possible joint production of electric cars, Belarusian Industry Minister Pavel Utyupin told a government meeting in February. This came several months after the Belarusian government said that China is interested in assembling electric cars at the BelGee factory in the East European country. 

Also not to be forgotten is the region’s homegrown champion in the EV field: Croatian electric sports car company Rimac Automobili. The company grew out of its founder Mate Rimac's hobby of building and racing electric cars, which began after he converted his BMW 3 Series into an electric car, as bne IntelliNews reported in 2016 following an interview with the company. Today, Rimac Automobili, based in Sveta Nedjelja, a small town near Zagreb, provides technological solutions and components to a wide range of successful car manufacturers across the globe, and — confirming its success in the field — in 2018 Porsche AG took a 10% stake in the company.