Opportunities through Electrification

The automotive market is constantly changing, the newest types of powertrain are attracting new players into the market. The lack of models with those new powertrains generates big opportunities for new manufacturers. Even starting with a single model, it has been possible to gain relevant market shares in a relatively short space of time. There are still segments left with great potential for new brands.

In the past two years, the shares of alternative drives have increased from 8% to 36% in the biggest EU16 markets[1].Even so, you cannot introduce electric powertrains into existing models as easily as introducing a different size of Petrol or Diesel engine. In total, there are only 15 vehicle models available with a Petrol, Diesel and electric motor. If you are in addition looking for a model with a hybrid variant among those 15 models, there are only three models left (VW Golf, Volvo XC40 and Hyundai Kona). This opens up the market for new models and new brands, because if a customer wants to change to a new type of drive, the model they have driven so far is not even available with this new powertrain.

If you compare the brand ranking of the top 16 EU markets, the classification is completely different for each type of fuel. While the rankings for Petrol and Diesel are largely similar, new brands such as Tesla, Polestar, Cupra or Lynk & Co. have moved into second place under the EVs ranking and have a total market share of 1,3%, higher than Land Rover, Mitsubishi, or Porsche. Polestar (19^th place in EVs), Cupra (12^th place in PHEVs) or Lynk & Co (9^th place in Hybrids) get more attention. Smaller brands, which were previously more exotic, have grown out of their niche with these new fuel types. First and foremost, would be Honda in fourth place for the Hybrids, Jeep at tenth place for PHEVs and Smart in thirteenth and MG in sixteenth place for the Electric Vehicle rankings.

Alternative drives are more popular than ever, be it because of the grants, the pandemic and thus the shorter journeys or simply as a lifestyle object. This represents an ideal entry point into a new market, especially in the segments not yet (fully) served by the established brands. In 2019, for example, Kia had an 86% market share in electric Compact SUVs. In the meantime, due to further competition in the segment, they are now down to 22%. Nevertheless, the market share is still extremely good for a brand that otherwise tends to be around four percent.

One could assume that the large share of the electric vehicles market only comes from well-known brands, but this is not the case. Even in segments with just a few small players, the new brands achieve combined market shares similar to new brands in segments with lots of small players. A good example is the PC small segment, whose share in Europe is just under 18%. There are currently only 7 electric vehicles and no PHEVs in this segment, which combined show a market share of 9.3% and represents an opportunity. The compact SUVs, on the other hand, make up for 20% of EU-16 registrations, but there are already 13 electric vehicles and 23 PHEVs, competing for an EV share of 8.8% in this segment.

In general, there is a lack of BEV or PHEV models in the smaller segments. Here, new manufacturers would have an opportunity to establish themselves in the market. Overall, it is noticeable that the number of models in the new fuel types is still rather low. For Petrol and Diesel, between 20-40 models are available per segment. Accordingly, new manufacturers have great opportunities to gain market share simply as they are one of the few alternatives and can thus develop into an established manufacturer in the longer term.

[1]Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy Netherlands, Norway, Poland, Slovakia, Spain, Sweden, Switzerland, United Kingdom