VW will overtake Tesla in EV sales by 2025, analyst says

Volkswagen Group will pass Tesla to become the world’s biggest full-electric vehicle maker in the next five years, as VW's huge investment in electrification starts to pay off, analyst firm LMC said.

Tesla's global EV market share is expected to slip from more than 20 percent in 2020 to about 10 percent in 2025, with VW Group's growing from less than 10 percent to more than 15 percent, Pete Kelly, LMC managing director, said last week in an online forecast event. Ford, Toyota, GM and Mercedes could also see their EV shares surge. 

"Tesla's been dominant as a brand in the past five years but clearly that can't last," Kelly said, citing an "onslaught" of new EVs from the VW Group, new offerings from German premium brands and from Toyota, which had backed hybrids and fuel cells but is preparing battery-electric models.

VW launched the first vehicle on its Modular Electric Drive Toolkit (MEB) platform, the ID3 compact-size hatchback, in the second half of 2020. By the end of the year VW had sold more than 54,000 ID3s in Europe, with the model trailing only the Renault Zoe (more than 99,000 sales) and the Tesla Model 3 (more than 85,000 sales) among EVs in the region, according to data from JATO Dynamics.

VW has also launched the ID4 crossover, which as a global model could soon outpace the ID3, and is expected to undercut the Tesla Model Y crossover on price.

By 2030, VW expects to have built a total of 26 million EVs worldwide, with 19 million based on MEB and most of the remaining seven million on the high-performance PPE platform.

Battery-electric vehicles were a bright spot amid the coronavirus crisis in 2020, with global sales up 27 percent in an overall market that fell 14 percent, Kelly said. Sales of EVs in Europe "exceeded expectations," he said, surging by 105 percent, and were up by 13 percent in China. 

Independent analyst Matthias Schmidt said there were 727,000 full-electric vehicles sold in western Europe in 2020, double the number from 2019.

LMC said that automakers expected to gain significant EV market share by 2025 included Daimler, from about 2.5 percent in 2020 to 5 percent; Toyota, from about 1 percent to 5 percent; Ford, from nearly zero to 4 percent; and GM, from about 2 percent to nearly 5 percent. 

The Renault Nissan Mitsubishi alliance, an EV pioneer with the Renault Zoe and Nissan Leaf, is expected to retain its 8 percent market share, as will Hyundai Motor Group (the Hyundai and Kia brands), which has about 7 percent of the EV market, LMC said. 

Chinese automakers, including SAIC (which makes the MG brand sold in Europe) and BYD, are expected to lose significant share, as EV sales increase in North America and Europe.

Kelly said LMC was expecting EV adoption rates to increase faster than earlier predictions, for several reasons: Tesla’s success and soaring market capitalization; new policies from the EU and the Biden administration in the U.S. to encourage EVs; and improvements in batteries as well as charging infrastructure. 

And the number of EV models available for sale globally will go from about 140 in 2020 to nearly 450 in 2025, LMC said. That will contribute to a growth curve from 2.1 percent market share in 2020, to 3.4 percent this year (a 59 percent increase), to 6.5 percent in 2023.