However, investments in electric vehicles (EVs) are unavoidable due to the enforced push towards electrification as the result of tighter CO2 legislation and targets. All EV powertrains (BEV, PHEV, EV, HEV) have grown both in volume and percentage terms during the crisis, whereas markets for alternative fuels (e.g. in Italy and other specific markets), diesel and petrol have all declined. In fact, the Covid-19 pandemic is likely to accelerate and intensify the transition to electrification as well as stimulating OEM partnerships such as the one between VW and Ford mentioned above.
Much of the current sales growth is driven by national incentives for EVs in many countries. Some of the stimulus can make a significant difference to the total cost of ownership (TCO) of electric vehicles and their desirability from a financial point of view. However, OEMs need to pay close attention to the scale and duration of such incentives, which are unquestionably critical in the adoption of EVs. In France, for example, an incentive scheme was launched in June 2020 for a maximum of 200,000 vehicles, and half of the total allocation had already been used up by the end of the first month. LeasePlan’s own studies in the UK and the Netherlands show that while financial incentives clearly boost the uptake of EVs, sales can also fall again as soon as the incentives are taken away.