European EV Sales Increased Over 13% YoY in Q1 2023 with Tesla Model Y as Bestseller

  • EV sales penetration dropped to 18.4% in Q1 2023 from 27.6% in Q4 2022
  • Tesla Model Y was the best-selling EV model across all major countries except Spain.
  • EV sales penetration is expected to exceed 25% again by the end of the year.

London, New Delhi, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – July 5, 2023

Europe’s passenger electric vehicle* (EV) sales increased by more than 13% YoY in Q1 2023, according to the latest research from Counterpoint’s Europe Passenger Electric Vehicle Model Sales Tracker. While overall passenger car sales in Europe are showing signs of improvement, they have not yet reached pre-COVID-19 levels. In terms of overall EV sales, Germany led the pack, closely followed by the UK, France, Italy, the Netherlands and Norway. Meanwhile, the share of EVs in total passenger vehicle sales was the highest in Norway and the Netherlands.

In Q1 2023, Battery EV (BEV) sales jumped 32% YoY while plug-in hybrid EV (PHEV) sales declined 13% YoY. Consequently, the EV share of total passenger vehicle sales declined during the quarter from that a year ago.

Meanwhile, there has been notable progress in the European market for Hybrid EVs (HEV) and mild-hybrid EVs (MHEVs). This indicates that Europe is making efforts to tap into the lower-end EV market while simultaneously developing battery ecosystems and fostering a circular economy. These initiatives are being undertaken before placing a stronger emphasis on pure EV sales.

Europe EV Sales Share by brand

Commenting on the market dynamics, Senior Analyst Soumen Mandal said, “In Q1 2023, most European EV sales were captured by the top five automotive groups – Volkswagen Group, Tesla, Stellantis, Mercedes-Benz and Hyundai-Kia. They accounted for nearly two-thirds of the market share. When it comes to pure electric vehicles (BEVs), Tesla holds the second position, slightly behind Volkswagen. In the plug-in hybrid electric vehicle (PHEV) market, Volkswagen takes the lead, followed by Mercedes-Benz and BMW.”

Chinese EV manufacturers struggled to increase their market share in Europe during the quarter. However, MG, BYD, NIO, ORA and Aiways managed to improve their sales compared to the previous year. On the other hand, LYNK & CO, Hongqi and Xpeng faced challenges in the European market. Nevertheless, we expect Chinese automakers to be able to enhance their market share in the coming quarters by offering cost-effective vehicles with advanced features, as the EV market is expected to perform better.”

The top-selling EV model during Q1 2023 was the Tesla Model Y, followed by the Volvo XC40, Tesla Model 3, Volkswagen ID.3, and Audi Q4 e-tron. These top five models account for nearly a quarter of the total shipments. The Tesla Model Y dominates the market across major European countries, demonstrating Tesla’s strong brand presence in the region, except in Spain where it faces more competition.

European EV sales Q1 2023

Discussing the market outlook, Research Vice President Peter Richardson said, “The penetration of EVs in total passenger vehicle sales in Europe experienced a decline this quarter, dropping to 18.4% from 27.6% in Q4 2022. This is a significant shift compared to the previous trend of continuous QoQ growth. Except France, all major countries experienced this decline during Q1 2023.”

“Several factors contributed to this decline, including the unstable economic conditions and the removal of EV subsidies by Norway. Germany, the largest EV market in Europe, experienced a decline as the looming recession and cautious consumer spending hurt the EV market. These circumstances impacted the overall adoption of EVs in the region. However, since April, the European region has shown signs of recovery. As a result, we expect the share of EVs to rebound and surpass 25% again by the end of this year.”

*Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.

*The countries in this study include Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, the UK and Ukraine.

*For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not covered by this study.

The comprehensive and in-depth ‘Europe Passenger Electric Vehicle Sales Tracker, Q1 2018-Q1 2023’ is now available for purchase at

Feel free to reach us at for questions regarding our latest research and insights.


Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Abhik Mukherjee


Soumen Mandal


 Neil Shah


 Peter Richardson


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Connected Car Sales Grew 12% YoY in 2022 With Volkswagen Group in Lead

  • Volkswagen Group led in connected car sales, closely followed by Toyota Group.
  • 4G cars captured more than 95% of connected car sales in 2022.
  • Tesla broke into the top-10 connected car sales rankings for the first time.

New Delhi, London, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – April 24, 2023

Global connected car sales* grew 12% YoY in 2022 with the share of connected cars in the overall car sales exceeding 50%, according to the latest research from Counterpoint’s Smart Automotive Service. The US remained the strongest market for connected cars followed by China and Europe. These three markets accounted for nearly 80% of the total connected car sales globally in 2022. Despite having a relatively small share of connected car sales, Japan experienced the highest growth in connected car penetration.

Commenting on the market dynamics, Research Analyst Abhilash Gupta said, “The penetration of connectivity in cars improved during 2022 after struggling in 2020 and 2021. In 2022, new facelift versions of older models like the Honda Civic, Toyota Corolla, Ford Escape and Chevrolet Equinox were introduced with upgraded 4G connectivity and new features. Some prominent features include remote lock/unlock, remote engine start/stop, climate control, vehicle status, location tracking, geofencing, emergency assistance, in-cabin music, video streaming, and over-the-air updates. Next-generation vehicles are being introduced with various connected and autonomous features that require high-speed internet access available through 5G. However, as of now, 5G remains a niche, available only in premium cars like the Ford F-150 Lightning, Cadillac LYRIQ, Mercedes-Benz EQS, Audi e-tron GT, BMW iX and GWM Haval HG.”

CC Penetration by regions_2022_Counterpoint

Gupta added, “With consumers’ focus shifting to connectivity in the car, non-connected car shipments are steadily declining. The top five automotive groups accounted for nearly half of the connected cars sold in 2022. Volkswagen Group led the charts in terms of connected car sales volume, closely followed by Toyota Group. Tesla broke into the top 10 for the first time.”CC Sales Share by group_2022_Counterpoint

Commenting on the market outlook, Senior Analyst Soumen Mandal said, “The shift towards digitization in cars is increasing at a rapid pace and is visible in the consistent rise of connected car penetration globally. Currently, 4G dominates the connected car market with almost 95% share. But as the automotive market is transitioning towards electrification, software-defined vehicles and autonomy, the need for seamless and faster in-vehicle connectivity will be fulfilled through 5G. By 2030, more than 90% of connected cars sold will have embedded 5G connectivity. Connected car sales are expected to grow at a CAGR of 13% between 2022 and 2030.”

* Sales here refer to wholesale figures, i.e. deliveries out of factories by respective brands, and consider only passenger cars with embedded connectivity.

The comprehensive and in-depth ‘Global Connected Car Tracker, Q1 2019-Q4 2022’ and ‘Global Connected Car Forecast, 2019-2030F’ are now available for purchase at

Feel free to reach us at for questions regarding our latest research and insights.

Counterpoint automotive quarterly


Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

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Abhilash Gupta


Soumen Mandal


Peter Richardson


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Berlin Factory Takes Tesla to Top Spot in Europe EV Sales as Chinese Brands Gain Ground

  • EVs contributed over 29% of Europe’s total passenger vehicle sales in Q4 2022.
  • Chinese EV brands sold nearly 58,000 units in Europe during 2022.
  • Europe’s EV sales are expected to exceed 4 million units in 2023.

London, New Delhi, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – March 6, 2023

Europe’s passenger electric vehicle* (EV) sales in Q4 2022 grew over 34% YoY to bring the 2022 total to over 2.7 million units, according to the latest research from Counterpoint’s Global Passenger Electric Vehicle Model Sales Tracker. Battery EVs (BEVs) continued to increase their share, growing by 36% YoY to account for almost 63% of all EV sales, while plug-in hybrid EVs (PHEVs) accounted for the rest. Germany was the largest EV market in Europe with almost 39% of total sales, followed by the United Kingdom and France. Germany also remained Europe’s fastest-growing EV market in Q4 2022 with 75% YoY growth, while Norway and Sweden’s overall passenger vehicle sales had the highest EV share in the continent. In terms of brands, Tesla managed to overtake Mercedes Benz to grab the top spot in Europe.

Commenting on the market dynamics, Research Analyst Abhik Mukherjee said, “EV sales in Europe are increasing at a slower pace than expected. But since many European brands target to convert most of their models to electric by 2025, we expect EV sales to accelerate in the next two years. European automakers need to keep a close eye on Chinese competitors. Most Chinese brands, like BYD, Lynk, NIO and XPeng, made their European debut in 2021, selling just under 21,000 EVs cumulatively. In 2022, Chinese brands sold almost 58,000 EVs, capturing over 2% of the market. With the current trajectory, their share is expected to double to around 5% by the end of 2023.”

Europe EV Sales Share

Market summary

Tesla became Europe’s top-selling EV brand in Q4, dethroning Mercedes Benz. Tesla’s Model Y also became the best-selling EV in Europe during Q4 and for the full year of 2022, followed by its Model 3. Production capacity at Tesla’s Berlin factory reached 3,000 units per week in November 2022. The factory played a crucial role in Tesla becoming the best-selling EV brand.

Volkswagen’s EV sales grew by almost 48% YoY in Q4, helping it stay the second best-selling EV brand in Europe. Volkswagen has been spearheading its ID models and the launch of an updated version of the ID.3 model will help the brand hold its position more firmly.

Mercedes-Benz sold over 76,000 EVs in Europe during Q4, a growth of 46% YoY. The top-selling models were the A-Class, EQA and GLE-Class. PHEVs accounted for almost 67% of Mercedes’ Q4 EV sales. Tesla and Volkswagen pushed Mercedes to third place in Q4 2022.

Europe top 10 models

Discussing the market outlook, Senior Analyst Soumen Mandal said, “EVs contributed over 29% of Europe’s total passenger vehicle sales in Q4 2022. We expect that more than 4 million EVs will be sold across Europe in 2023. The rise of Chinese brands will likely pose a threat to local manufacturers. Lynk & Co, a subsidiary of Geely Holding, sold over 20,000 PHEVs during Q4 2022, with its Lynk 01 model entering the list of top 10 best-selling EV models in Europe. The implementation of strict laws to limit carbon emissions makes battery manufacturing costlier across Europe, thus making European-produced EVs more costly than those imported from China. Unless policies are brought for vehicle imports, the sales of Chinese EVs will continue to increase across Europe.”

*Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.

*The countries in this study include Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom and Ukraine.

*For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not covered by this study.

The comprehensive and in-depth ‘Global Passenger Electric Vehicle Sales Tracker, Q1 2018-Q4 2022’ is now available for purchase at

Feel free to reach us at for questions regarding our latest research and insights.


Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Abhik Mukherjee


Soumen Mandal


 Neil Shah


 Peter Richardson


 Counterpoint Research

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Survey: Samsung Top Choice for Future Smartphone Purchase in UK

Samsung is the most preferred brand for future smartphone purchases in the UK, followed by Apple and Huawei, according to the latest Consumer Lens survey. Chances of consumers shifting from Apple to Samsung are high as three-quarters of the current iPhone users count Samsung among their top three choices for a future purchase. On the other hand, Samsung users gave equal importance to the iPhone and Android alternatives. About half of the respondents are using a smartphone no more than a year old. Female respondents are holding their devices slightly longer than males while homemakers are the ones retaining their devices for the longest period among all categories.

Senior Analyst Pavel Naiya said: “Samsung took the lead with its latest SKUs and continuous promotion, whereas prospective iPhone buyers are mostly waiting for its first 5G device. Apple users give more importance to the rear camera than Samsung users. It may be a result of the Apple advertisements focusing on camera. Battery life, price and build quality are the three most influencing factors for future purchases.”

UK: Most preferred smartphone brand for future purchase

Most preferred smartphone brand for future purchaseNote: Multi-response question
Source: Counterpoint Consumer Lens

An overwhelming majority (86%) of the respondents were concerned about the COVID-19 pandemic, with 37% stating that they would wait longer than usual for the next smartphone purchase. Students are the least affected by this. Three in four students see no change in the timeline for their planned purchase. The anti-China sentiment is not strong in the UK, with about half of the respondents saying it does not matter.

Research Associate Arushi Chawla said: “UK is one of the markets which were severely affected by the COVID-19 pandemic. However, the country managed to quickly control its spread with lockdowns and maintenance of social distancing. This is also reflected in consumer sentiment. Though most of the respondents are concerned about COVID-19, it will not affect their planned smartphone purchase. Two-thirds of the respondents are planning to spend as usual, whereas only 11% of them are interested in cutting their budget by 20% or more.”

Other key insights from the survey:

  • Since it is an operator-driven market, operator stores are the most popular choice for the location of purchase, followed by mass merchandisers and brand stores.
  • Operator stores are most popular among the respondents aged above 35 and least among the respondents aged below 25 or those who are unemployed. Brand stores are the most popular choice for iPhone users while the online mode is most popular for Huawei users.
  • About one-fourth of the respondents are interested in spending £478 and above ($600 and above) for their next smartphone purchase.
  • Cameras are more important for female respondents than males. They are also a distinctive feature for students to decide their next purchase.

If you are interested in a detailed analysis of smartphone consumer behaviour, it is available for the subscribers on our research portal.


The Consumer Lens survey was conducted among smartphone users in seven countries during May-June 2020. The consumer opinions are drawn from a heterogeneous group in terms of age, monthly income, gender and occupation. Data points abided with all the logical checks throughout the analysis section and gave a better representation of the ongoing smartphone trends and future purchase intentions.

Analyst Contacts:

Pavel Naiya

Arushi Chawla

Feel free to contact us at press(at) for further questions regarding our latest in-depth research and insights, or for press enquiries.

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COVID-19 Caused European Smartphone Market to Decline 24% YoY for Q2 2020

  • COVID-19 outbreak continues to impact the European smartphone market as sales contracted 24% YoY and 22% QoQ for Q2 2020.
  • Chinese players held 35% market share in Europe, new entrants like Oppo and Xiaomi grew 41% YoY and 55% YoY, filling the void created by Huawei’s decline.
  • Huawei continues to lead the chart for Russia smartphone market with 29% market share.
  • OnePlus grew 128% YoY in Eastern Europe driven by the good performance of OnePlus 7t and 8 series.

New Delhi, Mumbai, Hong Kong, Taipei, Seoul, San Diego, London, Buenos Aires – July 29th, 2020

The European smartphone market declined 24% year-on-year (YoY) and 22% quarter-on-quarter (QoQ) in Q2 2020 amid the worst part of the COVID-19 outbreak, according to Counterpoint’s Market Pulse service. Eastern Europe which seemed almost immune to the pandemic in Q1 2020 declined 24% YoY in the second quarter.

Commenting on the overall market, Peter Richardson, VP of Research said, “The impact of COVID-19 gathered speed in Europe during April as it was the first full month of lockdowns across almost the entire region, causing a decline of around 45% YoY and 30% MoM. As the lockdowns started to lift across Europe in May, the sales rebounded (+33% MoM). June was equally good, posting a further sequential increase of 34%. Though MoM comparisons look good, the overall scenario for the quarter still shows a 24% YoY decline.”

Sales did not completely stop as e-commerce channels remained open and functioning even in countries with the most severe lockdowns such as Spain and Italy, and this was supported by European governments’ generous furlough schemes. However, as this support is being reduced, there is an increased threat of wide-spread redundancies across many businesses. Russia’s smartphone market, which was slow to acknowledge the presence of COVID-19 in Q1 2020, became the worst affected European market in Q2 2020 declining 27% YoY for the quarter.

Commenting on the top OEMs in the European market, Abhilash Kumar, Research Analyst said, “Samsung continues to lead the market. This is driven by its diversified portfolio and new product lines that cater to the requirement of all price bands. Apple, supported by good performance of the iPhone SE and 11 series, restricted its sales volume decline to 14% YoY. Meanwhile, Huawei declined 46% YoY amid US-China trade sanctions. Xiaomi and Oppo grew 55% YoY and 41% YoY even during the pandemic. With their attractive specs at affordable prices, they managed to woo some potential Huawei users to gain share at its expense.”

Analyst Contacts:

Peter Richardson

Abhilash Kumar

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UK: Six in Ten Surveyed Hearable Users Plan To Buy TWS Within a Year

One in two respondents plans on having ANC in their next TWS device.

Apple and BOSE are the most preferred brands for future TWS purchases. 

New Delhi, Mumbai, Hong Kong, Seoul, San Diego, London, Buenos Aires – 24th June 2020


Six out of ten hearable users in the UK plan to buy a True Wireless Stereo (TWS) headset within a year, according to a Counterpoint Research Consumer Lens study. This consumer research study highlights the inclination of consumers towards TWS, with one-third preferring TWS for regular use.  The UK’s TWS market is set to grow at a 64% CAGR to 17 million units in 2022.

Looking at the future potential of TWS hearables, users who currently only have wireless hearables, 70% of them are interested in buying a TWS in the future. Among users who have both wired and wireless hearables, 60% of them are interested in TWS. The interest level is lowest among users who only have wired hearables, where only 44% of them are interested in a TWS purchase in the future. However, this is, at least partially, driven by users simply making use of the headphones supplied with most smartphones.

Commenting on the UK hearables market, Arushi Chawla, Research Associate at Counterpoint Research, said, “In this transitional phase towards a wireless lifestyle, hearables are part of the journey. Advancing technologies lead to smaller form factors and new designs that make hearables comfortable to wear and part of the day to day fashion. Further democratizing the technology is occurring as economies of scale are leading more and more smartphone brands to include TWS as a part of their portfolios.”

Chawla further added, “Tough competition between brands and the fast replacement cycles of hearables are acting as catalysts which will increase the penetration of TWS in the near to mid-term. According to our survey results, more than half of prospective TWS buyers are planning to spend between £50-£150 for their next hearable purchase. This is because many wireless hearable users are moving toward higher ASP TWS devices. Many first-time hearables buyers are also aiming to buy TWS hearables due to their wide availability. This will further push the sweet spot of the overall hearables market from below £50 towards £51-£100 in the next year.”

Exhibit 1: Hearable Purchase Intention by Price Band

Counterpoint Research-Hearable Purchase Intention by Price Band

Source: Counterpoint Research Consumer Lens Survey, May 2020

Analyzing the most sought-after features in future purchases, nearly 90% of our survey respondents expressed interest in active noise cancellation (ANC). One in every two is interested in having ANC in their next TWS purchase and more than half of them are ready to pay up to 20% extra for ANC.

Pavel Naiya, Senior Analyst at Counterpoint Research, highlights, “The interest in ANC over other features like auto volume adjustment, real-time translation, voice search, etc. is due to the multiple use cases for ANC in our daily life. It is helpful to create an uninterrupted environment when listening to music or an audiobook or a more distraction-free environment during work or study. ANC features in TWS are also praised for providing better sound quality, but concern was also expressed about the potential for ANC to drain batteries faster.”

Commenting on the OEM preference, Mr. Naiya added “Apple will continue its dominance of the UK hearable market because of its loyal smartphone user base. Bose is well-known for its wireless headphones and this popularity is translating also to TWS, helped by recent attractive offers. Sony’s high ratings in media reviews have helped it secure the third strongest brand preference – similar to Bose.”

Exhibit 2: UK: Future TWS Brand Preference

Counterpoint Research-UK Consumer Preferences for Future TWS Purchase

Source: Counterpoint Research Consumer Lens Survey, May 2020


A consumer-level survey was conducted with hearable users in the UK during May 2020. The consumer opinion belongs to a heterogeneous group in terms of age, monthly income, gender, and occupation. Data points were selected which abided all the logical checks throughout the analysis section and gave a better representation of the ongoing hearable trend and future opinion in the UK.

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Analyst Contacts:

Arushi Chawla


Pavel Naiya

Liz Lee

COVID-19 Weighs on European Smartphone Market in Q1 2020

  • The viral outbreak followed by lockdowns caused the Europe smartphone market to contract by 7% YoY and 23% QoQ
  • Apple remained resilient while Huawei declined sharply for the quarter – though this was more than COVID-related

New Delhi, Mumbai, Hong Kong, Taipei, Seoul, San Diego, London, Buenos Aires – June 3rd, 2020

Smartphone sales declined 7% year-on-year (YoY) and 23% quarter-on-quarter (QoQ) in Europe during Q1 2020 amid COVID-19 outbreak, according to Counterpoint’s Market Pulse service. The impact of the pandemic was relatively stronger for Western Europe, down 9% YoY, than for Eastern Europe, down 5% YoY.

Commenting on the overall market, Peter Richardson, VP of Research said, “Q1 is seasonally weak, but the coronavirus outbreak amplified this. The smartphone market decline was primarily due to COVID-19 outbreak across the region in the second half of the quarter. The biggest five markets in Europe entered lockdowns of varying severity at different points in March. Consequently, most of the offline stores were closed, though online remained open throughout. Also, the economic impact of the pandemic has led to lengthening replacement cycles as consumers withhold making discretionary purchases.”

Europe Smartphone Sales Market Share (%), Q1 2019 vs Q1 2020
Europe Smartphone Sales Market Share (%), Q1 2019 vs Q1 2020

Amid the COVID-19 outbreak, Italy was the worst affected of all European countries, driving the smartphone market to a 21% YoY decline. In other markets, some operators such as Vodafone, and retailers such as Dixons Carphone were able to adjust to the sharply higher online demand and somewhat offset the decline. Others however, like Mediamarkt/Saturn in Germany, had underinvested in digital channels and lost sales due to store closures.

Coronavirus did not officially make its presence felt in Russia until late March/early April and hence the market remained relatively resilient in Q1 2020, declining just 1%.

Counterpoint Europe Smartphone Market Q1 2020
Counterpoint Europe Smartphone Market Q1 2020

Commenting on the top OEMs in the European market, Abhilash Kumar, Research Analyst said, “Samsung continues to lead the chart for Q1 2020. This is driven by Samsung’s diversified portfolio across all price bands. Also, marketing campaigns around the Galaxy S20 launch boosted its overall sales. Unlike Chinese OEMs, Samsung had no supply issues and was not impacted by China lockdown worries.  Apple remained flat for the quarter and showed its resilience during the COVID-19 crisis. The iPhone 11 series continues to perform well, despite a lack of supply in some markets and some channels. However, the expensive models slowed considerably in March. Huawei declined a sharp 43% YoY for the quarter as the US trade sanctions continue to bite. Xiaomi has been the biggest beneficiary from Huawei’s decline as it grew 145% YoY capturing 11% share in the quarter.”

Key market summary:

  • Huawei’s co-brand Honor led the Russian smartphone market in Q1 2020.
  • Chinese OEMs like Xiaomi and OPPO benefited from Huawei’s continuing struggles and hence grew more than 150% YoY for the quarter driven by strong performances in Russia, UK, France.
  • 5G smartphone sales accounted for 4% of the overall market sales in Europe in Q1 2020.
  • Apple iPhone 11 was the best-selling model in Europe in Q1 2020.

Analyst Contacts:

Peter Richardson

Abhilash Kumar

Follow Counterpoint Research       

Huawei to Play a Limited Role in UK 5G

The UK government has decided to allow Huawei a limited role in building 5G infrastructure in the country. The UK has been under pressure, especially by the US, to exclude Huawei from 5G infrastructure deployments. But after a lengthy review, delayed by the December election, it is allowing Huawei to continue as an infrastructure provider, but with the following conditions:

  • Huawei will not be able to provide various core network functions or be used in sensitive geographic areas
  • Huawei’s share of any equipment type will be limited to no more than 35%

The UK government has always considered Huawei a ‘high-risk vendor’, but continues to believe that the risk of using Huawei equipment is manageable, provided its role is limited and that it is not allowed in sensitive parts of the network or country. The UK has, for many years, required Huawei to pay for a laboratory where Huawei’s equipment is carefully tested to assess its level of security threat. It has not been able to find anything that resembles a ‘back-door’ that would allow, for example, the Chinese government to intercept sensitive communications. It has, however, found considerable security vulnerabilities in the quality of Huawei’s software and cyber-security measures. In response, Huawei said it would invest two billion dollars to tighten the level of security. Nevertheless, concerns are less about Chinese government eavesdropping and more to do with the potential for a rogue actor to take down communications networks, partially or completely. Given the fundamental role that 5G will one day play in connecting much of daily life, this poses a threat that needs to be managed.

However while the UK government pondered the decision, three out of the the UK’s four mobile network operators had already started rolling out their 5G networks using Huawei infrastructure. This is unsurprising as Huawei is also a supplier of many 4G networks and there’s a synergy in using the same provider for both systems. Indeed, one of Huawei’s advantages in its approach to 5G is its ability to pair aspects of both 4G and 5G to drive faster and more cost-efficient deployments. Network operators have been vocal in their desire to keep Huawei as a supplier, citing issues of technology superiority and cost. If Huawei would have been prevented from participating in 5G, operators claimed it would have resulted in delays to network roll-outs of several years and substantial increases in cost.

Lobbying from telecom operators has likely been multiplied by lobbying from inside Huawei; several former members of the UK government now serve in various roles within Huawei, including Lord Browne – who is Chairman of Huawei UK.

The decision will have come as a relief for Huawei; other countries were observing the UK and are likely to follow its lead. But the relief is likely only partial because its continued identification as a high-risk vendor means it will struggle for the sort of market position it might otherwise have enjoyed.

And while the decision delivers some clarity on Huawei’s future role, there are aspects that will need to be handled carefully. One being how to define exactly what constitutes the core of the network. To deliver the benefits that 5G promises, more and more of the core functionality of the network will be distributed closer to the edge of the network, where Huawei will likely be allowed to play a role. And mixing different vendors’ solutions may limit the extent to which a network can realize the full capabilities of 5G. In practice, the restrictions outlined will likely limit Huawei to participating only in the radio access network (RAN). And some operators may have already exceeded the 35% rule and will need to plot a course to reducing their dependence on Huawei within the next three years.

Ericsson, Nokia and Samsung will be pleased that Huawei’s hands have been tied, but it’s perhaps less than they might have been hoping for. There is no relief for ZTE, which is effectively banned from the UK.

The UK government has been wrestling with a complex strategic calculation. Its closest ally is the USA, which has been pushing hard for an outright ban on the use of Huawei equipment. The UK has also likely been trying to keep China at least partially on-side. The uncomfortable truth is that it will need to forge trade agreements with both nations following Brexit. It is gambling that this conditional acceptance of Huawei will be enough to mollify Beijing without completely distancing the US. It may not have managed either.

5G Infrastructure – Share More, Plan Less

As 5G networks roll out globally, operators and administrators are seeking ways to accelerate the benefits of the new technology, while keeping costs, and other potential road blocks, under control.

China Telecom and China Unicom are actively considering sharing infrastructure. China Mobile may also join them; especially for networks in rural areas where the return on investment calculations are harder to justify than in urban settings. The three Chinese operators co-own a tower company, China Tower Corp, so some of the groundwork has already been laid. China Tower Corp has said it has received requests to install 65,000 5G base stations so far – a number it expects to exceed 100,000 by the year end.

China Unicom has said that sharing infrastructure can result in capex savings of between $28 billion and $38 billion — though at least part of those savings represent lost revenue for infrastructure vendors that have been holding out for the 5G spending bonanza. This indicates that the total spend may be considerably less than would otherwise be the case if all operators built their own networks.

In the UK, all four operators have established some form of infrastructure sharing. 3 UK (owned by CK Hutchison) formed a joint venture with T-Mobile (now EE) called Mobile Broadband Network Limited (MBNL). Separately, Vodafone and O2 have a jointly owned company called Cornerstone. Vodafone and O2 are are adding 5G to their existing shared infrastructure. This is a logical move as it minimizes the roll-out costs of the new technology and accelerates time to market – especially in less dense suburban and rural areas that are costly to cover. At the same time, they are providing for greater autonomy in urban areas, where the usage is most intense and therefore offers the greatest return for differentiated offerings. They may open Cornerstone to additional investors that will allow Vodafone and O2 to, partially, monetize their existing investments.

Mobile operators have tended to compete on the basis of network coverage and quality – exemplified by Verizon Wireless’ ‘Can you hear me now?’ advertising campaign of a few years ago. 5G will be no different; we are already seeing competitive shots being fired, with 3 UK claiming it is the only true 5G service provider in the UK, thanks to its 100MHz of contiguous spectrum. The moves toward more infrastructure sharing may not be smooth – but they do make sense in some circumstances. 5G services however, promise to be more complex and diverse than anything we’ve seen before – enabled by the capacity and speed of the technology – and by the increasing use of distributed computing capabilities through things like mobile edge computing (MEC), that will be key to delivering the ultra-low latency services expected in 5G.

In a separate move, the UK government has opened a consultation on whether to allow higher cell towers to be built without additional planning consent being required. The current legislation limits towers to 25 meters. Higher towers can be used to extend coverage in rural areas – and can carry more kit, though the size of antenna systems is tending to shrink with the latest developments.

Other industries often share infrastructure and compete on customer-facing service provision. Mobile network operators are no stranger to this; MVNOs effectively share the infrastructure of the host operators and compete in the provision of service. The most extreme step on this path would be the formation of a single national ‘Net Co’ that would be responsible for building a single wholesale network (SWN) to be used by all operators. It has been tried in a few markets – especially to provide service in areas that would otherwise not be covered, but they’ve not been successful. We expect the SWN model will not be used in 5G, but various forms of infrastructure sharing will increasingly be the norm.

If you would like to talk about 5G with us, Counterpoint’s Neil Shah will be attending the 5G Leadership Summit in Mumbai on August 30th. Follow the link to schedule a meeting with Neil.

UK Consumers Cool on Huawei

The US government has been discussing its concerns over Huawei as a potential security threat for many months. It has also been urging other governments to curtail the use of Huawei infrastructure products in telecom networks.

The UK government has criticized Huawei for lax security standards in its infrastructure, but it has stopped short of banning its involvement in the new 5G networks. Further decisions are still pending, but most expect telcos to be allowed to use Huawei kit.

The publicity surrounding these discussions actually had a positive effect on sales of Huawei smartphones – its 1Q 2019 sales jumped 50% globally – likely due to raising general levels of awareness of the company.

Nevertheless, Huawei’s progress was dealt a severe blow by the US administration adding Huawei to its so-called “Entity List”, which prohibits Huawei from buying components, software, and services from US-based firms. The effect was immediate and dramatic.

More recently the US administration has appeared to soften its stance. But the easing is only partial and Huawei remains unable to use components and software freely.  In the light of these swirling developments, we conducted a consumer survey to understand its effect on UK smartphone consumers who were increasingly shifting their purchasing toward Huawei products, before the US ban was imposed.

Full results are available for subscribing clients, but the following is a brief snapshot of some of the results.

According to the survey, most respondents are aware of the action taken against Huawei by the USA – either in detail or more generally – with a wide variety of sources of information being used to understand the ban.

However, more than half the respondents think the action by the US administration against Huawei is either unfair or a borderline case and should not have been imposed. This feeling is highest in the age group of 26-35 years where almost two in every three respondents are in favor of Huawei with males overwhelmingly positive towards Huawei; much more so than females.

Over 40% of those who were interested in Huawei before the ban, are still considering Huawei/Honor for future purchases. Younger people and those on lower incomes form the majority of those still considering Huawei. This is borne out by our anecdotal research with channels which have seen sharp falls in sales of Huawei flagship models, but much less severe falls in sales of Huawei’s and Honor’s lower cost mid-range products.

Consumer Opinion About Huawei Ban


Source: Counterpoint Consumer Lens

Should the ban be lifted, many respondents would happily return to buying Huawei smartphones. However, continuing uncertainties about Huawei’s future was cited as the main reason for respondents being unlikely to consider a Huawei smartphone, even if the ban was lifted. This suggests that a return to the previous fast growth trajectory will be hard to achieve quickly.

Chinese brand image also came in the top five key reasons affecting consumer consideration of Huawei. This fact may also tarnish other Chinese brands that are not affected by any trade restrictions.

The main beneficiary though looks to be Samsung, thanks to its strong brand, broad portfolio and excellent distribution that is enabling it to cover the supply gaps left by Huawei.

The detailed analysis is available to all subscribing clients.

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