Europe has outpaced China in attracting investment for electric vehicles and battery development, securing a record €60bn last year largely as a result of Volkswagen’s push into emissions-free cars.
The figure, compiled by Brussels-based non-profit Transport and Environment, is almost 20 times higher than the last calculation, made two years ago.
In the 12 months to mid-2018, Europe had received just €3.2bn in private and public funds for electric transport, while China attracted almost €22bn. For 2019 the respective figures were €60bn and €17.1bn.
“A few years ago Europe was nowhere in the race for electric vehicle supremacy,” said Saul Lopez, who researches electric mobility at T&E. “But EU CO2 targets concentrated carmakers and governments’ minds.”
While the report did not provide specific figures for the US, it lags behind Europe and China in electric vehicle investment.
Carmakers operating in Europe have been forced to invest in zero-emission technologies to comply with rules phased in at the start of this year.
The EU directive mandates that manufacturers reduce their fleet-wide carbon footprint to an average of 95g per kilometre by 2021, or risk fines amounting to billions of euros.
While the auto industry’s lobby group in Brussels has appealed for leniency in the wake of the Covid-19 outbreak — which brought car sales to a near halt and closed factories for weeks — Europe’s biggest carmakers have said they will comply with the new rules.
The world’s largest carmaker, Volkswagen, has been leading the charge, pledging to invest €33bn into electric technology over the next four years with the aim of having 75 battery-powered models on the road by 2029.
The German group has also invested in battery technologies, including €900m in joint projects with the Swedish producer Northvolt. China’s CATL, meanwhile, is spending €1.8bn on a battery plant near Erfurt, in central Germany.
The Czech Republic, home to VW brand Škoda, also stands to benefit from the Wolfsburg-based company’s electric ambitions, according to T&E, receiving €6.6bn if the carmaker distributes its battery technology investments evenly.
Additionally, Europe’s numbers were boosted by Elon Musk’s Tesla, which is ploughing €4bn into a factory just outside Berlin.
Last year, seven EU countries approved a €3.2bn fund for the development of batteries over the next decade, hoping it would spur a further €5bn in private investment.
While the coronavirus pandemic has led many carmakers to postpone non-vital projects, no major electric investment in Europe has yet been scrapped, and the overall demand for emissions-free vehicles has remained relatively robust.
Despite car sales across western Europe dropping by almost a third in the first three months of 2020, registrations of battery-powered vehicles rose 56 per cent year on year, according to Berlin-based market researcher Matthias Schmidt.
Electric vehicles “are more or less a safe haven” in Europe, he said, because of the EU’s regulatory requirements.
“However, one consequence of the coronavirus pandemic could be manufacturers choosing to buddy-up and create shared electric vehicle platforms,” Mr Schmidt added, “consequentially cutting a large part of their investments and freeing-up vital short-term cash.”
T&E’s report predicts electric vehicle sales will continue to climb in the aftermath of Covid-19, despite sharp declines in petrol prices, as companies take advantage of subsidies to upgrade their fleets.
France, Germany and other European states are discussing whether to introduce further incentives for the purchase of battery-powered cars.