Tesla thrives in Italy as broader plug-in market drops in March

Originally Posted in Opportunity: Energy.

It was widely expected, and it finally happened. While most European car markets continue to set new records and the monthly growth of additional car sales continues, Italy is stumbling its own way. Europe’s fourth-largest market last March saw its first – and brutal – decline in electric electric vehicles in many years of growth.

The statistics of the United Nations Educational, Scientific and Cultural Department leave no room for interpretation of what is a vast catastrophe for the auto industry. As the market contraction continues, just over 121,000 cars were registered in March, down about 30% from more than 171,000 units twelve months ago, an outright disaster for the Italian auto sector. The market share for gasoline and diesel engines was 27.3% and 21.1%, respectively (down from 31% and 24.5% last year), with registrations down nearly 40% year-over-year. Componentless hybrids captured 32.5% of last year’s share compared to 27%, confirming their position as the most popular powertrain, while also declining in absolute units by nearly 15% year-over-year.

Full electric cars posted a shocking performance, with 4,511 recordings overall for a meager 3.7% market share. This was a staggering drop, of -38.8% in fact, from the 7,375 units recorded a year earlier in the booming BEV market, but nothing surprising nonetheless. As it just happened in February, potential customers have been waiting for new stimulus, and so they put a brake on sales as an indecisive government contemplates the details of a new set of fiscal stimulus for the auto industry. This trend is bound to continue until the new scheme – now in the final stage of development – is confirmed by decree with the actual dates.

Plug-in hybrids fared better than BEVs and cut their losses, reaching 6,083 units — the best result since last July — and 5% market share (itself an annual improvement), down “only” 21.5% from 7,748 registrations in March. 2021. Steady performance of Transmission Hybrid Electric Vehicles (PHEV) has allowed plug-in sales to remain booming, for a combined plug-in market share of 8.7%, best so far in 2022 but also slightly down year-over-year. Will PHEVs stay on trend in the coming months? It looks as though their market flexibility will be further enhanced by the new stimulus package (which will provide support for a variety of engines), so we can expect Italians to continue to favor PHEVs over pure electric options in the near future, such as Older automakers are pushing this solution to a reluctant customer base.

It was inevitable that such a turbulent period for the Italian car market would have broader qualitative effects as well as small numerical declines. The monthly top 10 BEV chart shows one clear, if unlikely, winner amid all the uncertainty.

The Tesla Model Y climbed to the top with an impressive performance, 678 records, which is not only the model’s best result to date but also a show of strength in such a poor period without incentives. The American crossover SUV beat out cheaper competitors like the Dacia Spring, in second place with 516 units, and the Fiat 500e, which closed the podium at 495 records. A rather strong message from a car whose price starts at 64,000 euros (incl. VAT), two to three times the cost of its direct competitors! The lack of incentives obviously puts more pressure on cheaper cars, which were benefiting from a larger percent discount under the old incentive scheme (a fixed amount for any BEV, either €6000 or €10,000 when an old car is scrapped). The more expensive options are relatively less affected by the absence of government support.

It wouldn’t be surprising, then, to see that the Tesla Model 3 scored fourth with 378 units, ahead of many of the less expensive alternatives. The popular sedan may have suffered only from internal competition from its roomy sister, the Model Y, as it also happens elsewhere in Europe and the United States. With the price tag continuing to rise to new highs (the Long Range Model 3 sold as low as €54,000 a year ago, only to climb to €62,000 at the time of writing) and now very close to the Model Y itself, the sedan’s performance Compact Tesla is lower than it would have otherwise been at old prices and with generous incentives, when the result could have been three or four times higher (1364 registrations in March 2021). However, Model 3 deliveries were enough to fend off A- and B-segment cars like the Smart ForTwo, which took fifth place with 314 registrations, the Mini Cooper SE (155 units), the Peugeot e-208 (141) and the Renault Zoe (111) ).

In a month dominated by Teslas surrounded by microseconds, ninth place for the Hyundai Kona EV and tenth for the VW ID.3 represented the only presence of alternative, larger and more expensive models in the chart. A far cry from what has been dubbed for years as the next wave of “Tesla killers” poised to halt the exponential growth of the American brand, the emergence of luxury Tesla rival seems to benefit only the latter, as it has argued for two good years back. It seems that in a tough auto market with no support for BEVs, two things are going to happen: Tesla is in the spotlight, and competition is waning. Only the upcoming new incentive scheme may partly skew things in favor of older automakers: Subsidies will only go to models below Tesla’s current price range. Will that be enough to revitalize and rebalance the market?


 


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