Europe Electric Vehicle Market

Europe Electric Vehicle Market Size (2024 to 2029)

The European electric vehicle market was valued at USD 44,905 million in 2023. The European EV market size is expected to grow at a CAGR of 23.4% from 2024 to 2029 and be worth USD 158,557 million by 2029 from USD 55,412 million in 2024.

Electric vehicles (EVs) are primarily designed to replace traditional travel methods that cause environmental pollution. Electric cars have gained popularity due to numerous technological advances. They perform better than conventional automobiles, have higher fuel economy, lower carbon emissions and maintenance, and provide the convenience of charging at home, smooth operation, and reduced engine noise.

MARKET DRIVERS

Strict government regulations to curb pollution levels and reduce dependence on expensive fossil fuels are driving the growth of the Europe electric vehicle market. This region holds close to 25 percent of new electric car registrations worldwide. More than 1 in 5 cars in Europe was electric in 2023. It is also part of the around two-thirds of total car sales and stocks. Also, it is the most preferred location for exporting EVs. In 2023, the new electric car registrations climbed up to 3.2 million, a surge of approximately 20 percent to 2022. And, in the EU this figure was 2.4 million with the same growth rate. All this progress was due to the strict implementation of Greenhouse gas emission norms and other environmental protection laws.

A new law was passed by the Council of the EU in July 2023 for the installation of fast charging and substitute energy stations every 60 kilometers across the highways by 2025 end. Such laws and regulations are encouraging EV sales and increase its market share in the coming years. The stations will have 400 kW output for vans and cars and 600 kW for heavy-duty vehicles.

Since the last few years, fuel prices have sharply risen, leading to an increase in the inflation rate, and high transportation costs have forced consumers to shift from internal combustion engines (ICE) to EVs. Hence, the growing energy costs and competition between emerging energy efficiency technologies are driving forward the Europe electric vehicle market share. Further, the rising awareness of the environment has led people to choose EVs.  People of this continent are more concerned about environmental pollution as compared to other key markets like North America and Asia Pacific. Furthermore, European customers are also less cost-sensitive and more adaptable to the latest technologies which is fuelling the market growth rate.

MARKET RESTRAINTS

Reduction in subsidies, high interest rates, and costs are hindering the Europe electric vehicle market. The regional industry is currently battling lower new EV car registrations in most countries due to the end or soon-to-end of government grants and subsidies. Likewise, France decreased its subsidies and at the same time, Germany also finished incentives for company purchases in September and suddenly for private buyers in December. Another prominent market, Norway, reported the end of VAT exemption for Plug-ins.

In addition, the affordability of EVs is a major problem for European buyers. This is due to the lack of customer incentives for purchasing which was worsened by high interest rates, causing a significant obstacle for the market expansion. Moreover, continuing inflation and increased energy prices because of the ongoing Russia-Ukraine war have affected the demand for EVs in the regions.

The electric vehicle market in Europe has grown significantly due to the need to address future energy requirements. The need for sustainable transport plays a vital role in the demand for electric vehicles. The market is emerging as a crucial part of the automotive industry, and it represents a way to achieve energy efficiency along with the reduction of pollutants and other greenhouse gas emissions. The increase in environmental problems, together with favorable government initiatives, are supporting the growth of the European EV market. The growing energy costs and competition between emerging energy efficiency technologies are driving the European EV market growth. Currently, much attention is paid to passenger cars for electric vehicles, but this trend is expected to change soon and extend to other types of cars.

However, the high costs involved in manufacturing low fuel economy and the ease of service of the electric vehicle limit the rapid expansion of the market.

COVID-19 IMPACT ON THE EUROPE ELECTRIC VEHICLE MARKET

The automotive industry was adversely affected by the pandemic. During that period, a decrease in environmental pollution levels and other health benefits were experienced by the customers, which eventually accelerated the electric vehicle research and development operations and subsequent sales. And, Europe positioned itself as one of the three markets for EVs around the world. The United States and China are the other two leading regions. When combined, all three make up 90 percent of EV sales globally. Moreover, due to the uninterrupted application of ambitious electric vehicle goals, this regional industry was less affected as compared to the Internal Combustion Engine Vehicle (ICEV) and kept the sales growth rate positive, which led to a bigger market share of about 7.8 percent in the 1st half of 2020. However, the second COVID-19 wave exerted more pressure on EV development across Europe. The overall European Union passenger car industry declined by more than 23 percent to approximately 9.9 million units in 2020 due to the pandemic. Also, there is a direct relation between GDP and new passenger car registration. Particularly in 2020, GDP fell substantially which was reflected in the reduced number of new car registrations over the last decade. But, surprisingly, this connection did not work in the European EV industry, which registered an impressive 130 percent rise in electric car sales in 2020 and became the global leader in EV sales that year.

REPORT COVERAGE

This research report on the Europe electric vehicle market has been segmented and sub-segmented into the following categories.

Europe Electric Vehicle Market By Vehicle

• Passenger Vehicles
• Commercial Vehicles 

Of these, passenger cars hold the dominant position in the region due to the strict government regulations and consumer awareness of a pollution-free society. However, the commercial vehicle segment is predicted to witness rapid growth in the forecast period due to the rising adoption of these vehicles in public fleets and transportation in countries like London, etc.

Europe Electric Vehicle Market By Type

• Battery Electric Vehicle (BEV)
• Hybrid Electric Vehicle (HEV)
• Plug-in Hybrid Electric Vehicle (PHEV)

Among these, HEV and PHEV are presumed to contribute majorly to the regional market in the coming years due to more advanced options for charging and an increase in production units.

Europe Electric Vehicle Market By Vehicle Class

• Mid-Priced
• Luxury

Of these two, the mid-priced vehicles are likely to have the highest demand in the foreseen years due to the launch of several affordable electric cars by leading manufacturers in the region.

Europe Electric Vehicle Market By Country

• UK
• France
• Spain
• Germany
• Italy
• Russia
• Sweden
• Denmark
• Switzerland
• Netherlands
• Turkey
• Czech Republic
• Rest of Europe

Germany is leading the Europe electric vehicle market and holds the biggest share of this industry. Despite being at the forefront the country saw a record eight-year decline in EV sales in 2023. Moreover, the German Association of the Automotive Industry predicts purely battery-powered car consignments to decrease 14 per cent to 451000 units in 2024 as subsidy cuts to reduce demand.

France is another major player in the Europe electric vehicle market and witnessed a significant surge in revenue in 2023. It had a great year, which saw the entry of the latest affordable cars backed by favorable government subsidies. The share of battery electric and plug-in hybrid vehicles was around 26 percent of new cars sold. It was a massive 47 percent surge from 2022.

Spain is expected to grow at a higher CAGR during the Europe electric vehicle market forecast period.  This can be attributed to prolonging the country’s MOVES III incentive program until July 2024. It will give tax advantages and buying motives. Also, the advancements in the domestic EV charging infrastructure will accelerate the transition of the Spanish population to EVs from ICEs in 2024.

The United Kingdom electric vehicle market is driving forward steadily and is anticipated to expand in the coming years. As per the country’s trade association, the Society of Motor Manufacturers and Traders (SMMT), the industry saw robust growth in 2023 since COVID-19 with over 1.9 million new cars. It is a 17.9 per cent surge propelled completely by fleet investments.

Italy in the first quarter of 2024 experienced more than a 3.5 per cent decline in the automotive industry. As of now, EVs account for 3.3 per cent and hybrids for 38.9 per cent of the overall passenger car sales in Q1 of 2024. The EV sales fell by over 34 per cent whereas the hybrid vehicles witnessed an 8.9 per cent spike at the same period.

KEY MARKET PLAYERS

Companies playing a leading role in the European electric vehicle market are BMW Group, Tesla, Nissan Motor Corporation, Volkswagen AG, Toyota Motor Corporation, General Motors, Energica Motor Company S.P.A., Daimler AG, BYD Company Motors, and Ford Motor Company.

RECENT HAPPENINGS IN THE EUROPE ELECTRIC VEHICLE MARKET

• Volkswagen, Daimler, and Honda will showcase their latest electric cars at trade shows, and if they are able to meet their objective, it will help them avoid fines exceeding one billion euros. Companies from Volkswagen to Daimler will announce a new battery model in Frankfurt, hoping to attract consumers and reduce emissions.
• The Netherlands and Norway to completely ban the sale of fossil fuel cars by 2026. Other countries, such as Germany, also decided to ban the sale of conventional vehicles by 2030.