Article Type: News

Global Plug-in Sales for the 1st Half of 2018

2018 is going to be another great year for plug-ins: 783 000 units were delivered during H1 2018, a gain of 66 % over the same period last year. Preliminary results for July show an increase of 53 % over July 2017. China stands for 51 % of the global volume, so far, and reached a peak share of 4,8 % plug-ins in worlds largest car market. Battery electric vehicles (BEV) stand for 64 % of the global volume, plug-in hybrids (PHEV) for 36 %. This marks the global average, depending on the individual incentive schemes, the mix of battery electric vehicles and plug-in hybrids varies significantly between countries. BEVs can represent as much as 88 % of plug-in sales, like in the Netherlands, or just 12 % like in Finland. The Europe average was 51 % BEV for 2018 H1; in China BEVs stand for 73 %. In USA this number was 53 % until June, now shifting fast towards higher BEV share with more Tesla Model-3 deliveries.

It is safe to predict that global sales of plug-in vehicles will surpass the 2 million mark this year. We are expecting 2,1 million deliveries, a 64 % increase over the 2017 result. This is considering the regional growth trends and the seasonality of sales, with 60-65 % of deliveries occurring in the second half of the year. The above numbers are for battery electric vehicles (BEV) and plug-in hybrids (PHEV) and comprise the light vehicles categories cars, SUVs, MPVs and light commercial vehicles. Medium and heavy commercial vehicles will add another 280 000 sales in 2018, nearly all of them in China. The global plug-in vehicle population will reach approximately 5,4 million light vehicles by the end of 2018, 64 % more than at the end of 2017. Medium and heavy commercial vehicles add 800 000 units to the global stock of plug-ins.

The by far largest growth contributor is China, where we expect sales to increase by over 500 000 units to 1,1 million in 2018. The long awaited Tesla Model-3 will contribute with over 130 000 additional units this year. With deliveries still restricted to USA and Canada in 2018, the Model-3 already was the worlds best selling EV of all categories in June, July, much likely in August and in many months to come. It will completely dominate the North American plug-in vehicle market from now on.

Among the fastest growing markets for the first 6 months were China (+105 %), Canada (+168 %), The Netherlands (+126 %), South Korea (+169 %), Spain (+99 %,) Finland (+148 %), Denmark (+691 %), Portugal (+119 %) and Australia (+98 %). Many Central Europe countries have increased sales 3 to 4-fold, albeit from small bases. The share leader is Norway, as usual, where 37 % of new car sales were Plug-ins this year. Iceland comes 2nd with 14 % and Sweden 3rd with 5 % for 2018 H1 combined. Our Europe story on H1 has more details on this. Among the larger economies, China leads with a plug-in share of 3 %. All other car markets with over 1 million total sales show 2 % or less for H1 combined.

Over 2 million deliveries and over 5 million on the road

Growth in the 2nd quarter has beaten our expectations, with a staggering 70 % more plug-ins sold than in 2017 Q2. In May, the share in the global light vehicle marked reach over 2 %, for the month of December it can go as high as 3,5 %. Inventories for popular model are tight in a number of markets as in Norway, Sweden and Germany. Delivery times of 6 month and more are now common in Europe, where most cars are built to order. OEM have announced production increases for the coming model-year.

We increase our forecast to 2,1 million worldwide plug-in sales for 2018, thereof 350-360k in the US, 420-430k in Europe, 1150k in China and 160k outside the aforementioned. The 2,1 million units include passenger vehicles and light commercial vehicles. It means +64 % in terms of volume increase and a light vehicle industry share of 2,2 %. Two thirds of the 2018 volume are expected to be BEVs.

By the end of 2018, the plug-in vehicle population will reach around 5,4 million worldwide, an increase of 64 % over 2017 year end. Still, the impact on the total vehicle stock will be hardly noticeable in most countries. 5,4 million plug-ins on a global light vehicle population of around 1,3 billion, is just 0,4 %, one in 250. Growth is exponential, though, and the overall picture will change much faster than historic sales suggest. Adoption of successful technology is along S-curves, not straight lines.

China leads growth and volume

China usually starts the year with NEV sales and shares below trend. 2018 had a strong start with +115 % increase in Q1 and +100 % in Q2, including light commercial vehicles. From mid June, new requirements regarding e-range (>150 km) and specific battery capacity (>105 Wh/kg) became effective for subsidy approval. This put a lid on sales of some very popular small and mini-EVs. We expect growth in China to slow down in Q3 and Q4 until OEMs have solved the compliance issues of these models.

Japan is among the very few markets with a contracting plug-in sector this year. More comments about the reasons towards the end of this article.

Europe is a mixed bag, with sales held back by supply constraints in larger EV markets, triple digit %-increases in South and Central Europe, a strong recovery in the The Netherlands and incentive policy adjustments to promote more sales of pure EVs. The increases for total Europe were 40 % in Q1, 45 % in Q2 and 30 % in July.
The USA numbers for January thru June show only partly the Model-3 effect. July deliveries were over 14 000 and August estimates are nearly 18 000 units, pushing total sector growth to 90 % rsp. 120 % in these months.

BYD stays on top – for now

BYD leads the ranking for 2018 H1, a position it has held since 2015. BYD delivered 72 000 units in H1, twice as many cars as in 2017 H1, thanks to the success of the new Song SUV and a revised Qin Sedan. Both models are PHEVs. Tesla follows very closely, climbs from #3 in 2017 to #2 in the ranking and is growing faster (Model-3) than BYD now. The top spot for the complete 2018 looks certain for Tesla, with way over 200 000 deliveries worldwide.

Some Chinese OEM were not ready for the new EV battery requirements and lost considerable sales. The worlds best-selling EV in 2017, the BAIC EC180/200 series, had no deliveries in June. ZhiDou (a Geely affiliate) lost all their D1/D2 series volume that month. Clear winners in China were SAIC (Shanghai Automotive), Chery and the newcomers GAC (Guangzhou Automobile) and Hawtai, albeit from small volume bases.
Among the international OEMs, Volvo and Hyundai-Kia gained most share versus last year, while the sector representation of Ford went from bad to worse. Most European OEM do not participate (yet) in the steep plug-in growth in China and their volume gains are below the global sector growth of 66 %.

Beneath the top-25 there are at least another 25 smaller manufacturers for cars and another 10 for electric light commercial vehicles. Most of them are Chinese and operate in their local domain, a city or province. Many of them are EV start-ups, with varying chances for success. Even if badge-engineering is commonplace, there are few signs of sector consolidation, yet. The number of players keeps growing, every month.

Battery Chemistry Evolution

The traction battery landscape has changed a lot in the past 10 years. In absolute shipment terms, the traction battery volume increased from just 1 Gigawatt-hours in 2011 to 37 GWh in 2017, according to our Battery Shipment Tracker. This reflects the rapid increase in plug-in vehicle sales and the increasing battery capacity of those vehicles. These numbers are for the light vehicle sector; heavy vehicles, mostly buses in China, swallowed another 26 GWh last year.

The chart shows how the light vehicle battery shipments developed by their cathode chemistry. Following an experimental phase with a large variety of costly, low volume concepts, the appearance of the Nissan Leaf EV in 2011 lead to the dominance of the LMO type (Lithium Manganese Oxide). NMC (Nickel Manganese Cobalt) batteries went mostly into the GM Volt. The next phase has the fast expansion of Tesla with their large NCA (Nickel Cobalt Aluminium) batteries, developed with Panasonic. Starting 2015, fast growth in China generated more LFP (Lithium Ferro Phosphate) share in the global shipments, mostly supplied by BYD.

Today, the most popular battery chemistry for light vehicles is the NMC family, with their main suppliers CATL, LG Chem and Samsung SDI. Heavy vehicle still rely on LFP batteries, with CATL and BYD as main producers.

The traction battery business is critical for the success of vehicle electrification and we can just scratch the surface here. Feel free to contact us for further insights of our battery database.

Japan rules HEV sales and production

A word on HEVs and on Japan, which does not participate in the rapid growth of plug-ins this year. HEVs do not charge from the grid, have very small traction assist batteries (1,5 to 3 kWh) and very limited all-electric-drive capabilities (if at all). Their advantage is price. The entire space of BEV, PHEV and HEV had a volume of 3,5 million sales units in 2017, BEV 866k, PHEV 415k, HEV 2210k. The map shows the split into geographies and concepts for the first half of 2018, with a total volume of 2 million units. Plug-in vehicles grow faster (+66 % over H1 of 2017) while HEVs increased by just 6 %.

The ties of Japan and HEVs are exceptional: It all started with the Toyota Prius and Honda Insight, now 87 % of all worldwide HEV sales are from Japanese brands, 47 % of all HEV sales reside in Japan and one in four car sales in Japan is a hybrid.

So, why is Japan still hesitant to adopt plug-ins? Solid leadership in HEV design and sales volumes is one reason. Lack of domestic plug-in choices is another: only 6 domestic models are offered, 3 of them (Leaf EV, Prius PHEV and Outlander PHEV) stand for 90 % of all plug-in sales; imports represent a small niche. A strong belief in fuel cell solutions (FCV) and the shutdown of nuclear power plants are other important considerations. Tax savings on eco-cars are similar for PEVs and the best HEVs. Unlike in the other regions, plug-in sales in Japan are unlikely to rally anytime soon.

China Plug-in Vehicle Sales for the 1st Half of 2018

China keeps impressing the industry and its observers with an amazing uptake of Plug-ins, or New Energy Vehicles, NEVs, as they are called in China. NEV deliveries for the first half of 2018 were clearly above the past 2 years growth rates: Nearly 373 000 plug-in passenger cars, including 15 000 imports, were delivered in January thru June. This is 114 % more than for the same period of last year.

On top of that come 49 000 commercial vehicles, so far, mostly LCV and electric buses, 60 % more than 2017 1-6. China is, by far, the worlds largest market for Plug-ins. 50 % of global plug-in volume was sold in China, for 2018, counting passenger cars only. For electric commercial vehicles, 70 % of the global volume is in China and exports of electric buses from China to other markets are significant.

In May, the NEV share reached a new high with 4,8 % in a total monthly passenger car market of nearly 2 million units. Keen to raise the standard of the Chinese EV industry, the Government introduced new requirements to receive NEV subsidies in June: a minimum 150 km e-range for BEVs and a specific battery capacity of 105 W/kg. This has slowed down the pace considerably as some popular BEV models did not comply and stopped selling. June growth was reduced to 80 % and preliminary results for July show a 61 % y-o-y increase. We expect this trend to continue during the 2nd half, until best-sellers like the BAIC EC-Series are back on track again.

Despite the slow-down, we expect NEV sales in China to reach 1,1 million passenger cars this year, up 83 % from 2017. In addition we expect 275 000 commercial vehicles the be delivered in 2018. For passenger cars we expect the NEV share to reach over 6 % in December and 4,2 % for the complete year. Back in 2016, the Chinese Government set NEV targets for 2020: 6 % share in vehicle sales and 5 million NEVs on the road. With the current adoption rate, these targets, considered highly ambitious in international comparison back then, will be surpassed by a good margin.

Over 1 million deliveries this year

China is, by far, the largest market for Plug-Ins. 2018 NEV passenger car sales thru June were 373 000 units, 3 times higher than in USA, the #2 in the country ranking. With 96 % of sales from domestic OEMs, China is also the largest producer of Plug-ins. Since the boom started in 2015, y-o-y growth has been accelerating, +65 % to 2016, +72 % to 2017 and the expected +83 % to 2018.

This year, we expect NEV sales to reach 1100 000 units, counting passenger cars, 74 % of them BEVs and 26 % Plug-in Hybrids (PHEV). In a total market forecasted to reach 26,3 million passenger cars (+2,2 % vs 2017), this means 4,2 % NEV share.

Our detailed, regular reporting is for the passenger car market. In addition, 49 000 commercial vehicles were sold in the NEV category in 2018 H1. For 2018 we expect this number to reach 275 000 units, half of them large buses, most of them fully electric. For electric busses, 98 % of world sales are in China, today. The domestic sales leader is Yutong, the export leader is BYD. We are maintaining a database for worldwide electric commercial vehicle sales. Contact us for more details.

⅔ rd of volume in the second half

The monthly share development helps to explain the forecast: Only ⅓rd of Chinas NEV sales are during the first half of the year. The first quarter is usually hampered by pending approvals and subsidy paperwork. Is takes until April for shares to connect to the endpoint of the previous year.
This year had a good start and a new share record for NEVs was set already in May. The May result contains a good amount of sales brought forward from models which lost their subsidies in June (the aforementioned tougher requirements on battery capacity). Among them the worlds best selling EV, the BAIC EC series. This put a 15-20k dent into June sales, which is likely to continue into Q3 and parts of Q4.

Still, unless shares and growth completely depart from the usual seasonality, we can expect 1,1 million NEV sales when 2018 is closed. The December share can be as high as 6,5 %, which is twice as high than for other larger economies with total vehicle markets of 1 million and more.

Segment dynamics

An important reason for the Chinese lead in NEVs is their success in offering ultra-affordable EVs in the Mini (A) and Small (B) segments. The industry is upgrading, however, as the Chinese Government continuously raises the bar for granting subsidies. The NEV segments are highly dynamic and compared to the 2017 picture, a lot has changed: Mini and Small cars lost ground, BYD upgraded their SUVs to make space for the new Yuan. The BYD Qin PHEV 10-folds sales after its face-lift. SAIC enters the Compact segment with a Station Wagon (!) and leads it. E-range improvements for, both, BEV and PHEV are the norm, together with the annual model-year changes.

The BEV share is high in international comparison. Europe and USA typically have around 50 % BEVs in their plug-in sales. The reason is partly in the segment composition of Chinese plug-in sales. Over 40 % of NEV sales are in the Mini and Small segments, where PHEVs make little sense. The BEV / PHEV mix has been trending towards pure electric since the last 2 years. In 2017, 81 % of sales were BEVs, for 2018 we expect 74%, due to fewer mini-EV sales and the strong rebound of PHEV models for BYD.

96 % of China NEV sales are China-sourced. Import cars are subject to custom duties (recently increased from 25 % to 40 %) and imports do not receive NEV subsidies. At least, import BEVs are exempted from the prohibitive taxes on big engine luxury cars and SUVs. This makes Tesla a compelling alternative in the high-end import segment. Of all imported plug-ins, 2/3rd are delivered by Tesla.

A comment on segment nomenclature: EV-volumes uses a global segmentation scheme like many western car companies and agencies. In China vehicles are categorised into Cars, SUVs and MPV. No difference to what we do. Then, instead of our A to F segments, cars in China are classed into: A00 (=A, Mini), A0 (=B, Small), A (= C, Compact & D, Mid-Size), B (=E, Large) and C (=F, Luxury).

Change is certain

Despite a complete sales black-out in June, the worlds best selling plug-in, the BAIC (or BJEV) EC180/200 series maintained the #1 position in Q2 and for the 1st half of 2018. This could already change in Q3, if the planned battery upgrade is late and subsidies remain withdrawn. Change is the only constant and, except for the BAIC EC series, the top-30 ranking looks a lot different from the 2017 result. The huge %-variances are a good indicator.

The reasons behind this unprecedented dynamics: Febrile, large scale industry activity and, sometimes, Government intervention to meet revised targets for NEV deployment and competitiveness.

Since June of 2017, the total number of plug-in models available in China has grown by 45, from 56 to 101. We tracked 38 BEVs and 18 PHEVs from 28 OEM in June 2017 versus 70 BEVs and 31 PHEVs from 39 OEM in June 2018. Consumer choice, but also competitive pressure, is now by far exceeding the European and USA markets. 11 new OEM have entered the Chinese NEV market within the last 12 months, but only 1 of them (Tata with JLR) had more than 2000 sales this year and 8 of the newcomers stayed below 1000 units. A shakeout seems likely.

The top-5 manufacturer ranking after 6 months is: #1 BYD 71 900 units +103 %, #2 BAIC (BJEV) 61 000 units +102 %, #3 SAIC 55 000 units +300 %, #4 Geely/Zhidou 25 200 units -6 % and #5 Chery 24 500 units +120 %. The next 5 are JAC, JMC, Hawtai, Changan and Zotye. Tesla is #12 with 9500 deliveries (all imported) and BMW is #13 with 7300 deliveries, nearly all of them 5-Series PHEV and X1 BEV from local production by their J/V with Brilliance.

Exceeding the goals

The Chinese NEV fleet (vehicle population) reached the 1st million in October 2017 and ended 2017 with 1 260 000 NEV passenger cars in operation. By the end of 2018 and counting passenger cars, we expect 2,35 million NEVs to be in operation in China, 90 % more than at the end of last year. This puts China ahead of USA (1080k) and Europe (1350k). With around 200 million cars in operation in China, the PEV share is still just over 1 % of the total fleet, but it is higher than in other regions, where fleet build-up has a stronger legacy. If China reached the motorisation rate of Europe or USA, it’s fleet would be 750 million cars. Hardly sustainable with ICE propulsion.

5 million NEVs on the road by the end of 2020 is a previously stated target of Chinese authorities. This is for all vehicle types combined, including LCVs, trucks and buses. With the current rates of NEV adoption, this target is very likely to be exceeded. Encouraging.

Europe Plug-in Sales Results for 2018 H1

Plug-in vehicle sales in Europe reached 195 000 units in the first half of 2018, 42 % higher than for the same period of 2017. These include all Battery Electric Vehicles (BEV) and Plug-in Hybrids (PHEV) in Europe, passenger cars and light commercial vehicles. The plug-in share of the European light vehicle market reached 2,2 % in June and 2 % for the first half year. The trend, so far, indicates further increases around 40 % during the remainder of the year. 51 % of plug-in sales are pure electric vehicles (BEV) and there rest are Plug-in Hybrids (PHEV). Only 87 fuel-cell vehicles were sold during the period, up from 66 last year. With powerful Hyundai and Toyota behind them, the numbers speak for themselves.

The German market is the strongest growth contributor, in terms of volumes. Even if growth rates do not reach 100 % as last year, this year’s 52 %, combined with the sheer size of the German market, push volumes forward. Norway is still Europe’s largest market for plug-ins, with a staggering share of 37 % in this year’s light vehicle sales. Counting passenger cars only, the share was 46,5 % in 2018 H1. A good indication of what is possible with compelling savings on vehicle taxes, much lower operating cost and a well developed charging infrastructure.

All Europe countries post growth for 2018 H1, many of them over 100 %, albeit still from low volumes. For the full year of 2018 we expect 430 000 plug-ins to be delivered in Europe, and a market share of 2,35 %. This is for the total of all EU and EFTA countries. The European plug-in vehicle fleet is now over 1 million and we expect the population to be 1350 000 units when the year ends.

Growth is everywhere this year

Norway still leads the European country ranking. 36 500 plug-ins were delivered including June and for the complete 2018 we expect 84 000 sales, a share of 45 % in Norway’s market for passenger cars + light commercial vehicles. Germany sales grow faster, though, and we expect it to take the volume lead in Europe with 88 500 registrations when 2018 is closed.

All Europe markets showed growth during the first half of 2018, though with varying pace. Plug-in sales in Netherlands and Denmark have turned around to rapid increases, following years of volume losses in adverse incentive schemes. France and UK continue with moderate increases as their domestic OEMs (PSA, Ford, Vauxhall) have less than compelling offers in the sector. Belgium has cut the incentives on luxury PHEVs and sales grew by a mere 4 %. All others have double or triple digit growth during the period, albeit from smaller bases.

In total, Europe plug-in sales grew by 42 %, compared to 2017-H1. Q1 increased 40%, Q2 by 45%. A caveat for high growth in the 2nd half is vehicle supply. Our tracking of plug-in vehicle inventory shows an average of only 4 days of supply on stock and 2 months of order back-log. Models with more than 10 000 unfulfilled orders, each, are Hyundai Kona, VW e-Golf, Jaguar i-Pace and Nissan Leaf and obviously the Tesla Model 3, all of them BEVs.

The Nordics lead in EV adoption

This diagram shows the share of Plug-ins among all light vehicles sold in a country and the composition of BEVs and PHEVs in the overall share.

Except in Denmark, where the market was confused by incomprehensible green car taxation plans, the nordic countries lead in EV adoption. The plug-in share in Norway is off the chart, as usual, with 37 % YTD. EVs have a long tradition in Norway (the Th!nk and Buddy microcars) and EV awareness in Norway started some years ahead of other countries. Thanks to clear, stable incentives in form of generous tax and toll savings, EVs have become the smart choice for light duty transport, despite long distances and a less than balmy climate. Low-cost electricity from 99 % hydropower helps, too. Iceland is in a similar position.

The mix of BEV vs. PHEV varies a lot between markets, highly depending on national incentive schemes. PHEVs captured more share compared to 2017, driven by the growing number of entries from German OEM. For 2018 YTD, 51 % of plug-in sales were all-electric in Europe.

PHEVs are the main contributor to high plug-in shares in Iceland, Sweden and Finland. It can be expected that future incentive schemes will reduce support for PHEVs and increase them for EVs. An example is the introduction of a tougher “bonus-malus” vehicle taxation system in Sweden from 1st of July. It created a swing of 10 % towards BEVs in the July registrations.

Market share development indicates 430k for 2018

Plug-in volumes and shares from January to June have been significantly above 2017. YTD, the share is 2 %, compared to 1,44 % for H1 of last year. Volume increased by 42 % during this period.

For the remainder of the year we assume the share development to continue on this trend and follow the seasonality of previous years. In a total market of 18 million light vehicles for 2018 (+1,9%), these shares convert to 430 000 units as the year-end result.

Supply may set limitations, especially for BEVs. Inventories are tight for most models and some have long waiting lists. Manufacturers have announced higher output for e.g VW e-Golf and BMW i3, but the situation for e.g the Hyundai Kona is still unclear, which could put a dent into Norway sales, where 7000 customers are waiting for it.

Exponential fleet growth

930 000 Plug-ins were on European roads at the end of 2017. Adding the 430 000 of 2018 and accounting for some scrapping, their number will increase by 45 %, to approximately 1350 000 at the end of 2018. With nearly 300 000 000 light vehicles on European roads, this means 0,45 % of them can plug in. A tiny share of the total fleet, but growing exponentially. The number of public charging locations does not keep pace anymore, we counted 80 000 public locations in Europe at the end of 2017 and expect they number to reach 100 000 by the end of 2017, a 25 % increase within a year.

Even if 80-90 % of all charging is done at home/work, BEV drivers in particular face several challenges when travelling longer distances, today: Finding the nearest station with the right connector type/power is one, having the station operators tag/card/app is the next, learning the unique operation routine is the third and the occasional malfunction is the forth. And then you have not even left the country yet. Range anxiety is amplified by charging anxiety and, unless public charging becomes easier and more reliable, it will restrict all EV adoption, except for Tesla. We can only encourage charging providers to unite on best practices and quality standards.

Change at the top and few losers

Unlike in USA, the new Nissan Leaf had a successful start in Europe and displaced the long term leading Renault Zoe from the #1 position. New and improved models definitely pay off, as the triple digit growth rates of Volvo XC60, Porsche Panamera, Smart and others can witness about. The new Volvo SUV gave the Mercedes GLC and the Mitsubishi a tough match last quarter. The Audi e-tron and BMW’s Active Tourer had facelifts and a related sales dips during Q1 and Q2, but volumes were back to normal in June.

Since June of 2017, the total number of models available in Europe has grown by 5 from 51 to 56. We tracked 27 BEVs and 29 PHEVs in June 2018. A good indication that the 42 % YOY volume growth is not just product driven. It is also the result of better awareness and insight, both, in the industry and among car buyers.

The top-10 manufacturer ranking after 6 months is #1 BMW 35 450 units +29 %, #2 VW 33700 units +44 %, #3 Renault 21 400 units +10 %, #4 Nissan 19 300 units +42 % and #5 Daimler 18 800 units +35 %. Growing fastest is #6 Hyundai-Kia with +234 % and #7 Volvo with 164 %. Mitsubishi (#9) is the only brand that lost volume (-3 %), Tesla is on #8 (the Model-3 sales start is not before 2019) and, finally, PSA is #10.

USA Plug-in Sales for the First Half of 2018

122 000 plug-in vehicle have been delivered in the first half of 2018, an increase of 37 % compared to H1 of 2017. 53 % were pure electric (BEV) and 47 % were plug-in hybrids. The plug-in share of the total light vehicle market was 1,4 % for the 1st half of 2018, compared to 1,1 % in H1 of 2017. The increases were consistent, month-on-month, like in 2017.

Growth is accelerating, even if many of us expected more. The reason is not only in the ramp-up delays of the long awaited Tesla Model-3: US sales of the new Nissan Leaf remain sluggish (unlike in Europe and Japan), as battery and charging capabilities are questioned for the current version and many wait for the 60 kWh version of the coming model-year. The Chevy Volt, selling 23 300 units in 2017, is down to 7 858 sales during the first half of this year. Both models have plenty of inventory in their large distribution networks.

Sadly, we have to reduce our outlook of for the complete 2018 to 350 000 units (was 400k), as 3 big-sellers did not reach the H1 volumes to be expected. Strong sales of Toyota Prius PHEV and Honda Clarity PHEV could not quite compensate. Fuel cell powered models (3 available) sold a mere 1400 units during the first 6 months, 400 more than January to June last year.

Better news can be expected for the 2nd half of 2018: Unprecedented growth rates and volumes with better Model-3 supply and the 1st million plug-ins on US roads, in November.

The wait is soon over

USA is the 2nd largest country for Plug-ins, after China, but growth and market share are less impressive than in many other developed economies. Sales remain concentrated in few states: According to the Auto Alliance’s ZEV tracker, nearly 50 % of USA plug-in sales are in California, 12 % are in other states with ZEV mandates and 38 % are outside the 10 states with ZEV mandates.

2018 will be a game changer in the US, as the Tesla Model 3 will start to be produced in high numbers, essential for Tesla to satisfy the six-figure long waiting list and to show a profit. We expect total plug-in sales to reach around 350 000 units this year, a 75 % increase over 2017. The plug-in share for 2018 is likely to reach 2 %, which is getting the US closer to other larger car markets.

US plug-in vehicle market to be dominated by Tesla

For Q1 and Q2, our sales estimates are 24 100 units Model-3 in the US and 2500 in Canada. Tesla produced 38 300 Model-3 during this period, the balance being “in transit” to customers. Likely, some late June deliveries were postponed to early July. This, in order to stay below the 200 000 accumulated sales mark, where the federal tax incentive is phased out. Reaching this number a couple of days later, in July, prolongs incentives for another quarter.

The weekly production rate is a matter of high interest. Tesla has reached the 5000/week rate during single day sprints. Checking Bloomberg’s Model-3 Tracker, the average for June was around 2100/week. In a recent meeting with investors and analysts, Tesla expressed 7000/week as a target by the end of 2018. We interpret this as an average, not a sprint peak rate. Based on this, we expect ca 160k production and 130k sales to US customers for 2018.

Despite restricted supply, the Model-3 has been the best selling plug-in for every month since January. For the complete 2018 we expect Tesla to stand for half of USA plug-in volume and, counting BEVs only, 3 out of 4 to be from Tesla. For the first half of 2018, all Tesla models were among the top-5, already.

More Tesla, more BEVs in the mix

More Tesla volume means more BEVs in the mix, which is a healthy development towards real zero tailpipe emissions. 45-50 % of plug-in buyers still prefer PHEVs and for good reasons: Light trucks now stand for 60-70 % of vehicle sales and there is only one BEV, the Tesla Model-X, starting at $80k, 8400 sales this year. The Jaguar i-Pace has not landed, yet. PHEV buyers can choose among 8 models from 7 brands starting at $27k, total sales 9100 this year. The other reasons are BEV range and charging, where only Tesla has offered widely acceptable solutions.

The Model-3 lowers the price barrier, without sacrifices on range and charging (ok, you will pay for the juice). The additional 100 000 deliveries in 2018 H2 (our expectation) will leave a clear trace in the BEV / PHEV ratio.

It does not solve the issue of a more affordable BEV SUV, where the coming Hyundai Kona (already completely oversubscribed in Europe), the future Tesla Model-Y and others will do the job. In China, this segment is red-hot and new BEV SUVs appear on a monthly basis. It’s just a question of time until this trend reaches Europe and the US.

3,5 % share by the end of 2018 and 2 % for the year

Plug-in vehicle shares tend to develop in accordance with peaks in Tesla deliveries, high at the end of the quarters and with troughs after that. The June peak did not happen this year, as Tesla stayed clear of the 200 000 limit for full federal tax incentives. Presumably, this volumes shows up in the July sales, instead. Assuming that the expected production increases materialise, the remainder of the year will see rapid share growth towards over 3 % in December, for an average of 2 % for the year. It means that USA is catching up with other larger car markets, which have 2 % and more electrically chargeable vehicles in their total sales.

This is for the average of all US States. California is likely to surpass 10 % plug-in share in December, while staying below 1 % in at least 20 other US States. It took 7 years for California to get from 1 % to 10 %, some indication for the future potential for other US States.

Reaching the 1st million

The current plug-in population is around 860 000 vehicles on the road. The first 1 million can be celebrated in November this year. By the end of 2018 we expect it to be 1080 000, nearly twice the number in operation in December 2016. Charging logistics remain an obstacle for most EV doubters, esp. when they lack access to charging at home or at work.

In April this year, we counted 23 000 public charging locations with ca 65 000 connectors of all types in the US. Since April 2016, the number of stations with DC fast chargers (CCS or Chademo) increased by 66 %. Stations with Level-1 and Level-2 charging were up 24 %, Tesla Supercharger stations became 85 % more. The EV population (52 % BEV and 48 % PHEV) was up by nearly 100 % in the same period. Level-1&2 charging PHEV owners will find it increasingly difficult to find a charging occasion, unless they charge at home/ at work.