Sweden saw plugin electric vehicles achieve a market share of 37.6% in July 2021, up almost a third from July 2020. Higher company-car tax which came into effect in July put a dampener on plugin sales, further amplified by the hangover from the pull-forward in June. Overall auto sales were down some 43% from long term seasonal norms, also in part due to the tax change.
July’s combined 37.6% plugin result comprised 15.1% full battery electrics (BEVs) and 22.5% plugin hybrids (PHEVs), which is roughly in line with the ratio over recent months. Prior to a policy change in April, Sweden’s incentive regime had heavily favoured PHEVs.
Year to date cumulative plugin share now stands at 39.7%.
Effects Of The July 1st Tax Change
The change in plugin market share between June and July (see chart below) was heavily influenced by the July 1st introduction of an increased tax rate for company cars (the “benefit-in-kind” tax or förmånsvärde). The tax change – making most cars more expensive to run – caused a dampening across the entire auto industry (all powertrains, and most price points) with July seeing the lowest auto sales volume of the year so far.
The “benefit in kind” tax is an ongoing tax, calibrated to the sticker price of the vehicle. With the policy changes, lower and mid priced vehicles (anything under ~€64,000) are taxed more heavily than before. Vehicles priced in the €30,000 to €35,000 range see the largest changes, and paying up to €75 per month (€900/year) more than they did previously.
Of course expensive luxury cars still end up paying more benefit-in-kind tax than more affordable cars do, but the relative tax burden on luxury cars has slightly lifted compared to previously, so it’s the relative change in tax burden that is being noticed, and affecting consumer’s buying choices.
How does this tax change affect plugins? Ironically, one of the ways that plugins have long been given “help” in Sweden has been by value-rating them (for benefit-in-kind tax purposes) at a lower price-bracket than their actual sticker price. Officially, they have been value-rated at the sticker price level of “an equivalent combustion vehicle” (which typically has had a lower sticker price than an EV).
Now though, with more affordable vehicles seeing relatively higher increases in their tax level compared to more expensive vehicles, this “help” of classifying EVs at a more affordable price point has actually become a bit of a curse, at least in relation to this July tax change.
Anticipating this looming tax change, June saw a strong pull-forward effect, with very high overall auto volumes and a particular pull-forward for plugins, which led to an all time record plugin share of 49.4%.
It was thus expected that July would see a cliff in auto volumes (and especially for plugins), both from the tax change itself, and as a hangover from June’s pull-forward.
In the coming few months, the psychological aspects of this policy change will cool off, and the backwash from the pull-forward will fade away. Folks will remember that a new plugin is still a better total-cost-of-ownership value postposition than a non-plugin. At that point plugin market share in Sweden will resume its inexorable rise.
Top Selling BEVs
July’s best selling BEV was the Kia Niro, which stepped ahead of the usual leaders, the Volkswagen ID.4 and the Tesla Model 3. The Niro BEV was second only to the Kia Ceed PHEV in Sweden’s overall auto sales ranking in July.
Tesla of course does not schedule international deliveries to land in Europe at the start of a quarter. The Volkswagen ID.4’s lower-than-usual ranking in July is harder to explain; likely VW is just shuffling limited supply of the ID.4 around different European markets.
Notice that the Audi Q4 e-tron joined the monthly ranks for the first time, at 7th spot, whilst the long-popular original Audi e-tron (still clinging on to #9 in the YTD ranks) fell out of the monthly top ten (to 15th position).
For Audi BEVs then, it looks like the king is dead, so “long live the king” in the form of the new Q4 e-tron. Next year, a segment-matched replacement for the original Audi e-tron will arrive in the form of the Audi Q6 e-tron.
As is the case over much of Europe, the VW Group MEB SUV siblings (Volkswagen ID.4, Skoda Enyaq, and Audi Q4 e-tron) are together proving dominant in Sweden. Let’s see what happens when the Tesla Model Y starts arriving in volume.
July’s plugin share in Sweden was heavily influenced by the above tax changes, but the market will resettle over the coming few months.
We should see a plugin share soon climb back into the mid 40s percent, and perhaps get above 50% in December. What do you think? Please share your thoughts in the comments.