EV outlook 2025 – What is in store for Europe?

12 March 2025

What comes next for electric vehicles (EVs) in Europe’s new and used-car markets? How has the technology developed in terms of total cost of ownership (TCO)? Autovista Group experts explore the EV outlook with Autovista24 editor Tom Geggus in a webinar.

Is Europe’s transition to EVs really in trouble? How will electrification develop over the next decade? What is happening to EV residual values (RVs)? Have plug-ins and internal-combustion engine (ICE) models reached a point of price parity?

In a new webinar, Autovista Group experts uncovered key EV market trends. The panel included Autovista Group’s chief economist Dr Christof Engelskirchen, Ana Azofra, regional head of valuations for Southwest Europe and Poland, Christoph Ruhland, director of business development, and Christian Schneider, director of content at EV Volumes.

Are new EVs out of charge?

Europe’s new light-vehicle market, including passenger cars and light-commercial vehicles (LCVs), grew in 2024. However, sales continued to lag behind the figures recorded before the COVID-19 pandemic.

Unpacking data from EV Volumes, Schnieder highlighted that battery-electric vehicle (BEV) registrations fell by 0.5% year on year. This equated to 10,706 fewer units delivered. Ground was made up by full (HEVs) and mild hybrids (MHEVs), with both technologies enjoying double-digit growth.

HEV registrations increased by 22.9%, with an additional 294,628 units hitting the region’s roads. Meanwhile, MHEVs accelerated by 15%, with 337,086 deliveries made within Europe. Hybrids enjoyed success as they continued to slowly replace traditional ICE models.

Economic uncertainty has likely given some consumers pause for thought as they assess the financial realities of buying a BEV. Many all-electric models are still comparatively expensive, particularly as governments amend, phase out, or completely withdraw incentive programmes.

Transitional powertrains, like hybrids, offer more economical technology, while not being reliant on charging infrastructure. This means hybrid buyers can still benefit from reduced emissions and faster refuelling times.

Regional inconsistencies

EV adoption, including BEVs and plug-in hybrids (PHEVs) is not consistent across Europe. Different regions enjoy various levels of success. Unsurprisingly, the Nordics led a ranking of European countries by EV new-car market share.

‘Those countries have a lot of money that they could spend to boost electrification, to give high incentives and to invest into infrastructure,’ Schneider explained. Meanwhile, southern countries like Spain and Italy, have continued to struggle. The same is true in Eastern Europe, with Poland, Romania and Hungary also seeing lower shares.

Portugal is an outlier in this trend, as every third car registered in the country last year was an EV. This is thanks to recent governmental incentives, with a scrappage scheme up for consideration as well. Geographical elements also play a part, with shorter distances to cover between most destinations. Plus, a warmer climate means batteries avoid the stress of colder weather.

Relief for carmakers?

The European Commission recently published its Industrial Action Plan for the bloc’s automotive sector, providing some relief to carmakers. The proposal reiterated the planned 100% CO₂ emission reduction target for passenger-car fleets by 2035.

However, an amendment could see CO₂ limits between 2025 and 2027 combined into an average target. This will allow carmakers to compensate for exceeding targets in one or two of these years by overachieving in the remaining time.

Commenting on the action plan at its launch, Sigrid de Vries, director general of ACEA, welcomed the plan. ‘The proposed flexibility to meet CO₂ targets in the coming years is a welcome first step towards a more pragmatic approach to decarbonisation dictated by market and geopolitical realities,’ she said.

‘It could be positive, it could also be a bit of a devil in disguise,’ Engelskirchen said in the webinar. ‘If you do not do a good job in 2025, you will have to over-deliver in 2026 and 2027. I think it is smart for the time being to do it like this because it will alleviate some of the pressure.’

The EU is also looking to learn lessons from past incentive plans. Engelskirchen highlighted the need to address used-car markets. ‘You cannot make the transition happen on new-car markets if you do not address demand for those buying used cars.’

The outlook outcome

EV Volumes’ forecasting team expects the emissions proposal will make it through the European parliament. With that in mind, Europe’s EV market will see a slightly flatter 2025 and 2026 before speeding up in 2027.

‘We think that the countries in Europe will be affected in slightly different ways by this new proposal from the commission,’ Schneider said. It is unlikely that developed EV markets, like the Nordics and Portugal, will be affected.

However, Spain, Italy and Poland might see more of an impact as their national targets are not as strong. So, these countries might see EV demand flatten more in 2025 and 2026. Acceleration would then be needed in the following years to make sure targets are met further down the line.

The RV outlook

Examining the German used-car market, Azofra revealed how BEVs recorded one of the most significant price adjustments last year. Using data from Autovista Group’s Residual Value Intelligence tool, she tracked the pricing trends from January 2024.

‘Although prices remain on a declining trend, the pace has slowed. The previous price adjustments have already contributed to increasing market congestion and adjustments this year are expected to be milder,’ she said.

As outlined in Autovista Group’s previous webinar,  Belgium was forecast to see a larger negative adjustment. This was linked to the greater presence of BEVs in the market. Comparing the country to Germany, there are similarities. However, both markets are at a different point in their EV transition.

‘The time it takes for the market to adapt in these two countries is completely different. The smaller markets have fewer shock absorbers, less market inertia and react faster to changes in pricing, competition, and regulations,’ Azofra said. ‘The outlook is more negative in Belgium this year. However, the impact in 2026 is expected to be minimal and even positive by 2027.’

In Spain, where EV adoption is slower, key performance indicators are pointing towards greater stability. Unpacking the age of cars on offer reveals no significant ageing effect for BEVs. Increasing stock days are also pointing towards market saturation, while prices saw greater stability, indicating the desirability of vehicles.

So, after seeing negative adjustments last year, BEVs are forecast to come under further pressure in 2025. This is because of stock saturation, especially of outdated three to four-year-old models, which do not feature the latest technologies.

There is also pressure on carmakers to meet CO₂ targets, meaning a continued EV push in the new-car market. More incentives and pricing competition are also a possibility.

Is price parity possible?

During the webinar, Ruhland explained the complexities of calculating TCO. To begin with, a new car’s list price may undergo discounting, leading to a lower transaction price. On the used-car market, the model retains some value, but depreciation sees a reduction from the transaction price.

On top of this, TCO is calculated by including any finance and acquisition costs, including registration tax or VAT. Utilisation then covers insurance, energy, service and wear, tyres and any utilisation taxes.

Using Car Cost Expert, Ruhland explored the possibility of price parity between BEVs, PHEVs and ICE models. Looking at the German market first, he examined the performance of powertrains at 48 months and 40,000km.

The BMW X1 formed part of some exemplary analysis as it offered BEV, PHEV and ICE options. Additionally, its TCO results were also mirrored by other brands’ models, representing a market-wide trend.

Adding utilisation and acquisition costs revealed that the BEV option was not the best TCO option in Germany. Instead, diesel was calculated to have the best TCO at the set age and mileage. The fuel type was followed by the BEV option, then petrol, with the PHEV in last place.

List price and depreciation

‘While the list price for the other powertrains is more or less on par, the BEV comes with a higher list price. This means its depreciation is starting from a higher point. In addition, we can see that the residual value for the BEV is a little bit lower,’ Ruhland explained.

The BEV option did enjoy an insurance advantage, but surprisingly a disadvantage in terms of fuel. This is because of the different charging options in Germany, including slower AC and the more expensive DC. Servicing and lower road tax did offer an advantage, but not enough to offset the higher depreciation.

In contrast, the Netherlands offered a near-polar opposite TCO outcome across the powertrains. The BEV option was by far the cheapest choice followed by the PHEV. The diesel was by far the most expensive in terms of total cost of ownership.

Both BEVs and PHEVs had a big advantage in terms of acquisition taxes. In terms of utilisation, EVs also gained an advantage when it came to road tax.

‘The TCO advantage is there because the government in the Netherlands is making driving ICE more expensive than driving an EV. If we were to remove those tax advantages, the picture would be very similar to what we have seen in Germany,’ Ruhland highlighted.

Enjoyed EV outlook 2025 – What is in store for Europe? Make sure to sign up for the next webinar: Driving the future: EV trends transforming the global and European market. It will take place on 22 May 2025 at 9.30am GMT / 10.30am CET. Register for your place today.