Daily Brief: Europe’s Electric Vehicle Market Is Only Going From Strength To Strength

Daily Brief: Europe’s Electric Vehicle Market Is Only Going From Strength To Strength

almost 3 years ago3 mins

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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.

Solid start

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.

Europe and China will lead global EV adoption

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.

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Copper's Price Hit Its Highest Level In A Decade

Copper digger image

Now we’re not saying global companies are only after one thing, but the price of copper did hit its highest level in a decade on Monday…

What does this mean?

With the vaccine rollout well underway and the world’s businesses gradually shaking off last year’s rust, the global economy is on the up and up. And investors trying to gauge the strength of that rebound need look no further than copper, whose many industrial uses – in construction, transportation, and infrastructure – make it an invaluable economic bellwether.

Red hot

Copper isn’t the only metal that’s having a moment, either. Lithium, cobalt, and nickel are essential to electric vehicles, which might be about to get a shot in the arm from the US president’s $2 trillion infrastructure plan. All three have seen their prices hit multi-year highs this year, and they could just be getting warmed up.

Why should I care?

For you personally: Someone’s going to pay for this.

Rising commodity prices push up companies’ costs and dents their profits, so it’s no surprise that those firms have been talking about raising product prices to make up for the shortfall. And it’s not just big-time industrials you’ve never heard of: everyone from drinks giant Coca-Cola to household goods conglomerate Procter & Gamble told investors at their quarterly earnings announcements that they’d be passing their higher costs onto consumers soon enough.

The bigger picture: All good things might come to an end.

Still, this rally might be about to hit a snag. For starters, India – one of the world’s biggest raw materials consumers – just reported record coronavirus cases for a fifth straight day, and there’s no guarantee other countries’ recoveries won’t end up derailed too. Secondly, commodity-hungry China is planning to withdraw the economy-boosting support it introduced during the pandemic. And that could knock its surging growth – and its demand for sweet, sweet metals – off course.

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