Fad Men

Image source: Valentin Salja @valentinsalja - Unsplash synchR, Vera Aksionava - Shutterstock

What's going on?

At least this is one craze that seems to be hanging around: fresh data showed electric vehicles (EVs) represented 15% of Europe’s total car sales last quarter.

What does this mean?

It’s true that there was a slight drop-off in EVs’ market share last quarter from the quarter before, but that doesn’t tell the whole story. For one thing, the quarter before saw manufacturers rush to ship EVs that would meet newly introduced stricter emissions rules. And for another, EVs’ market share last quarter was still double what it was at the same point the year before. That continued growth might come as a relief to traditional carmakers, which have spent a lot of money on electrifying their fleets – and a lot of energy convincing investors that the extra costs will be worth it in the end.

Why should I care?

The bigger picture: China isn’t invincible.
Europe overtook China as the biggest EV market last year, and that’s a title the region’s expected to defend in 2021. Germany, France, and Italy, after all, boast generous subsidies, while Volkswagen – the region’s biggest carmaker – is slated to release a whole host of new EV models. Speaking of, Volkswagen has its eye on a title of its own: the German giant became the top EV-maker in Europe in 2020, and now it’s aiming to usurp Tesla as the global leader by 2025.

For markets: Tesla has tough days ahead.
Carmakers earn regulatory credits on every EV they sell, but legacy carmakers haven’t traditionally sold enough to stay compliant with emissions rules. Tesla, meanwhile, has more than enough, so it sells them on. And since they don’t cost the company a thing to produce, the admittedly small revenue tends to disproportionately boost the carmaker’s profits. But there’s trouble ahead: the more EVs traditional carmakers sell, the fewer regulatory credits they need from Tesla – which could hit the carmaker’s bottom line (tweet this).

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Copper Digger

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.