One of the notable effects of COVID-19 on the European vehicle market has been the surge in electric vehicle sales. In Q1 2020, before the pandemic hit, battery electric vehicles (BEVs) accounted for 3.57% of the West European passenger car market. By Q4, BEV market share had surged to 10.71% (23% alone in December 2020).

This was due to a number of factors. Firstly, OEMs – conscious of the need to meet CO2 fleet targets for 2020 – flooded the market with new BEVs and increased customer choice significantly. Second, to kickstart several markets, suffering under the pandemic, introduced a number of incentive schemes to try and boost vehicle sales. Most of these schemes had a green hue, thus making BEVs a more attractive proposition for consumers.

Consequently, average fleet CO2 per km emissions plummeted and it is expected that none of the manufacturer pools for CO2 emissions will face substantial fines for non-compliance on targets in 2020. Fines have been payable since 2019 and amount to €95 for each gram of CO2/km over target the manufacturer pool finds itself at year end.

Before 2021, the manufacturers were far removed from their flight paths for being compliant. The ICCT has calculated that in the period 2015-2019 the average CO2 reduction for the market was 0.6g CO2/km for each year. In 2021, the manufacturers achieved a 1g/km reduction each month.

This year promises to be tougher for the manufacturer pools to avoid compliance fines. Electric vehicle purchase incentives have either already ended or will be tapered away by participating countries. Secondly, credits available through the European Commission’s framework for encouraging a reduction in CO2 emissions are changing their basis in 2021. Phase-in credits, worth 3g for each manufacturer pool in 2020, are absent in 2021.

Additionally, so-called super-credits that saw each BEV in a manufacturer’s total worth two vehicles are tapered in 2021 to a 1.67:1 basis.

Already in 2021, the West European market has broken the quarterly sequential improvement in BEV penetration seen throughout 2020 as in Q1 2021 BEV share was 7.12% down from 10.71% in Q4 2020. However, Q1 2021 share was more than double the level seen in Q1 2020.

Put together, it will be interesting to see the approach of the manufacturer pools in meeting the challenges of their fleet CO2 targets in 2021. All indicators so far suggest that the absence of tailwinds in 2021 will make it far harder for the pools to avoid non-compliance fines.