Europe's EV Sales Accelerate But Long-Term EU Mandates Look Demanding

Forbes

26-04-2025

Fiat Grande Panda battery electric compact car on display at the AutoSalon on January 10, 2025 in ... More Brussels, Belgium. (Photo by Sjoerd van)
Europe's new electric vehicle market has been showing signs of life in 2025 with Volkswagen leading the way and the Chinese stumbling temporarily, but the current pace of growth is too slow to get close to European Union long-term targets designed to force citizens entirely out of new combustion-powered vehicles and into EVs by 2035.
The EU has decreed that no new vehicles powered by diesel or gasoline engines will be sold from 2035 and the target for 2030 is close to 80%. But the industry is close to forcing big changes in the rules by allowing other technologies to flourish. That would allow a longer life for hybrids and the use of so-called e-fuels.
Most forecasters agree that by 2030 European EV sales will reach only between 30 and 50% of the market. Among those brave enough to speculate in print about 2035, investment researcher Jefferies reckons that EVs will reach only 50% of the market. EV Volumes is a hopeful outlier, expecting market share of 60.5% in 2030 and 93.1% in 2035.
The European Automobile Manufacturers' Association said new EV sales jumped 23.9% in the first quarter to 413,000, compared with the same period of 2024. European EV sales stagnated last year at just under 2 million and a market share of 16%.
The trouble with these carbon dioxide-based EV targets for European manufacturers is that legislators were apparently unaware that China had a huge lead over its own domestic manufacturers and that adherence to the targets would devastate its own industry. This led to the recent introduction of punitive tariffs on Chinese EV imports.
There is no shortage of worries for European auto manufacturers. The economy is weakening, and competition from China threatens even the likes of BMW, Mercedes, Porsche and Audi despite the tariffs. Chinese automakers like BYD and Geely now have at least a 30% cost advantage in EV manufacturing, investment bank UBS has said. These premium German automakers are also under threat in China where the locals can now outsell even classic European brands.
This upheaval heralds the start of an era where the traditional manufacturers of the West would see their markets undermined to such an extent that some would be forced into bankruptcy or mergers. Professor Stefan Bratzel, director of Germany's Center of Automotive Management, has talked of an approaching 'Darwinian' moment for the industry.
President Trump's attempt to abruptly end years of what he calls unfair tariffs couldn't have come at a worse time and has induced frightening stock market and currency fluctuations and threatened to undermine long-established markets and supply chains.
These mounting pressures mean EU politicians will be forced to water down the CO2-based rules and allow much more flexibility to give European EV-makers a lifeline. This has already started. The EU recently extended the deadline for 2025 compliance by a couple of years.
More serious concessions are likely said Santiago Arieu, analyst with Fitch Solutions.
Renault vice-President Gilles Vidal presents a Renault 5 E-TECH electric car. (Photo by EMMANUEL ... More DUNAND/AFP via Getty Images)
'We believe that the notion that Europe's new light-vehicle market will be entirely EVs from 2035 has lost momentum over the past 2-3 years owing to challenges in achieving higher EV penetration rates in the mass autos market. We therefore believe that the prospect of the EU revising its targets closer to 2035 is substantially higher now compared with market expectations in 2021,' Arieu said.
Fitch Solutions expects European EV market share will reach around 35% in 2030 and 52% in 2034.
Arieu said more affordable and advanced EVs over the medium term allow a moderately optimistic outlook, although much of the increased demand for EVs so far has been induced by government incentives.
French automotive consultancy Inovev said most current EV sales are in the price range €35,000 ($40,000) to €50,000 ($57,000), including the Volkswagen ID.3 and Teslas Model 3 and Y. This year will see the launch of many cheaper EVs, like the Citroen e-C3 (from €23,300/$26,500)) Fiat Grande Panda (€24,900) Renault 5 E-Tech (€27,990), Hyundai Inster (€29,250/$33,300)) and Kia EV2. Inovev forecasts an EV market share of 35% by 2030.
Next year VW will launch the ID.2 and ID.1.
Arieu said European governments are becoming increasingly worried about the damage to employment from the demise of ICE.
'There is growing support from European governments for their automotive sectors as many jobs are tied to ICE supply chains. This suggests that some European countries are likely to show greater resistance in the coming years in relation to the EU's CO2 emission targets and the broader 2035 plan to only allow zero-emission light vehicles to be sold,' Arieu said.
Hyundai Inster Cross battery electric car. (Photo by Sjoerd van)
'Despite the recent flexibility introduced by the EU, the emission targets remain stringent, posing significant challenges not only for car manufacturers but also for European policymakers,' Arieu said.
This move to ease the way for carmakers is not popular with green advocates like Brussels-based Transport and Environment.
T&E said the recent concession was justified by 'unrepresentative' sales data for 2024.
'The EV sales rebound shows that the existing EU target is working. Require carmakers to sell more electric cars and the buyers will come. It is a mistake to change the rules in the middle of the game. This must be the last flexibility carmakers are given. Let's allow the 2030 and 2035 targets to do their work and bring affordable EVs and cleantech investment into Europe,' T&E's Julia Poliscanova said in a statement.
Matt Schmidt, founder of Schmidt Automotive Research, sees some good news for Europeans. Schmidt said Volkswagen made a strong start to the year, with four of the top five EV sales in the first couple of months accounted for by its brands. VW made inroads into Tesla's market share as it face-lifted the Model Y.
More good news for Europeans concerned Chinese brands, as recent sales acceleration came under pressure. Chinese EV market share rocketed from 3.8% in 2021 to 9.5% last year.
'However, since the turn of 2025, that pace has decelerated and moved into reverse as European brands roll out new products in line with the tightening EU CO2 fleet emission legislation,' Schmidt said in his latest monthly report.
That relief for Europeans may be short-lived.
'Things look more positive for Sino-brands such as BYD – which will be helped by local production from the end of this year – SAIC, Geely and Chery entering the market in stealth under various alias brands such as Omoda, Ebro and Jaecoo gaining strength across the U.K. and Spain,' Schmidt said.
Schmidt said West European EV sales will jump 32.6% in 2025 to 2.56 million with market share rising to 21.5% from 16.7%. In 2030 EV sales will account for 54.0% of the market or 7.1 million.