EV Sales In Europe Set To Spurt But 2030 Mandate Looks Impossible

Electric vehicle sales in Europe will accelerate out of the doldrums in 2025 mainly thanks to a recovery in Germany, but European Union-mandated targets for 2030 look hopelessly optimistic.

Forecasts for EV sales in 2030 suggest a major change in policy is required, but for the next year at least outcomes will give temporary solace to legislators.

Schmidt Automotive Research expects Western European EV sales to jump from 1.9 million last year to 2.7 million in 2025 and a market share of 22.2%, after stagnating in 2024.

EV research house Rho Motion said EV sales in all of Europe will rise 15% to 3.5 million in 2025.

EV sales in 2024 were held back by a lack of affordable sedans and SUVs, a suspicion that vehicles were being held back ahead of a tightening of EU CO2 emissions rules in 2025, and Germany.

Schmidt Automotive Research founder Matt Schmidt reports that according to Verband der Automobilindustrie (VDA), EV sales in Germany will rebound in 2025 with a 75% increase to 666,000. New EV sales in Germany last year fell nearly 30% to 380,600 after the government withdrew subsidies. VDA is the German auto industry association. Germany is Europe’s biggest auto market.

Despite the fall last year, this forecast for Germany looks brave given the election scheduled for next month. Because of proportional representation the election is unlikely to produce a clear result, and negotiations over who governs could last months. It would take a new government to restore subsidies for EV purchases.

According to industry researcher Rho Motion, car manufacturers in the EU will be experiencing sleepless nights in 2025 as long-anticipated emissions targets come into effect. Few car companies are adequately prepared, with billions of euros of fines on the line.

Renault has said the European industry overall faces fines of around €15 billion ($15.6 billion) if it misses the 2025 CO2 emissions target. Volkswagen says it will take an estimated €1.5 billion ($1.6 billion) hit to the bottom line this year for exceeding the target.

This talk of big losses infuriated green lobby group Transport & Environment which said these claims are based on “flawed” arguments because the manufacturers have many new cheaper EVs about to hit the market.

Rho Motion said despite many cheaper vehicles on the horizon, manufacturers will still be hit by fines.

“Alongside the emissions targets, many car manufacturers are set to launch new smaller and cheaper EV models to boost uptake cornering the sub €25,000 ($26,000) market. However, car manufacturers are still predicted to miss this year’s EU targets in quite some way and could face up to €10 billion ($10.4 billion) in fines between them,” Rho Motion said in a report.

Schmidt said it was likely some EV sales were held back last year.

“Manufacturers are now releasing new EVs and lower prices are stimulating new orders, reflected by Volkswagen’s latest offer of its VW ID.3 on a four-year lease from as little as €249 ($259) per month,” Schmidt said.

“A host of new models will also boost models for private consumers in the small car sector, including the Renault 5, set to make a splash in 2025. This is a sector that has largely been ignored up to now, with manufacturers preferring to focus on large and more profitable models aimed at corporate drivers that continue to benefit from tax subsidies in Germany aimed at deterring sales of gasoline or diesel-powered models,” Schmidt said.

Other relatively cheap new EVs appearing this year include Renault subsidiary Dacia’s revamped Spring (via China) and the Hyundai Inster. Stellantis brands proliferate in this sector with new EVs including the Citroen e-C3, Leapmotor TO3 (also via China), Vauxhall Frontera, and the Fiat 500e.

According to S&P Global Ratings, European manufacturers are being pressured by tightening EU CO2 regulations and competition from China. These problems require firm political action, but the two most important countries in the EU, Germany and France, are facing an election and political stalemate, respectively.

“This leaves (manufacturers) in Europe exposed to margin dilution because they will have to sell EVs at low margins, purchase carbon dioxide credits, and face regulatory fines next year, or any combination of these,” S&P said.

This will weigh on the profits of most traditional automakers in Europe, S&P said. S&P doesn’t expect much change in the level of EV market share by the end of this decade, suggesting 30% would be a maximum by 2030. That would spell big problems for the manufacturers because the EU mandates an EV market share of around 80% by 2030 and the U.K. a similar number which could well be increased to 100%.

Most forecasters agree that 80% is unlikely, and half of that more likely. EV Volumes’ forecasts a 61.6% share in 2030 for Europe as a whole. French automotive consultancy Inovev sees an EV market share of 40% at most by 2030. Investment researcher Jefferies cut more than two million sales from its 2030 forecast a couple of months ago. Its 2030 forecast now stands at 4.7 million for a market share of 35%. Professor Stefan Bratzel, director of Germany’s Center of Automotive Management, said market share is likely to be between 40 and 50% in 2030.

This big difference between forecasts and outcomes suggests the European Commission’s Strategic Dialogue on the Future of the European Automotive Industry in Brussels will be forced to consider actions, not words.