Will European EV registrations surge in 2025?
27 March 2025
What is the outlook for European electric vehicle (EV) registrations in 2025 and beyond? How will complex challenges impact deliveries? Neil King, head of forecasting at EV Volumes, presents the latest European forecast with Autovista24 special content editor Phil Curry.
Europe’s light-vehicle market, comprised of passenger cars and light-commercial vehicles (LCVs), increased by 1.7% year on year in 2024. This came after a strong improvement in registrations of 13.9% in the previous year.
There are many potential challenges facing the European market this year. Additionally, new action plans have eased major hurdles facing the EU market. This makes forecasting the region’s performance difficult.
Currently, EV Volumes believes there is too much uncertainty to quantify the impact of possible tariffs and developments surrounding the war in Ukraine on European light-vehicle sales. It does assume there is a greater risk of rising inflation and energy costs. This may lead to higher interest rates across the region.
Accordingly, EV Volumes forecasts that Western and Central European light-vehicle registrations will grow by just 0.65% in 2025. This is lower than the December 2024 forecast, which predicted growth of 2.6%.
Complex challenges in European market
Just over 15 million units are forecast for delivery in 2025. This falls short of the more than 18 million units registered in Europe during 2019. This means the continent’s automotive market will face another year struggling to achieve pre-COVID-19 levels.
EV Volumes does not see the European market returning to these levels during its forecast horizon. This is currently set to 2040. The forecast for 2026 now sits at year-on-year growth of 2.1%. This hinges on a complex interplay of regulatory and economic factors.
For example, stricter CO2 emissions standards are expected to lead OEMs to pool emissions with other manufacturers. The regulation is also predicted to force carmakers to push battery-electric vehicle (BEV) sales. They will look to achieve this through lower prices, discounting and rolling out new models.
Meeting the lower EU emissions target will require a major increase in EV sales and may create a price war supported by lower lithium costs. OEMs may even resort to restricting internal-combustion engine (ICE) supply to avoid costly fines for exceeding their emissions targets.
The outcome will depend on how OEMs balance short-term gains with long-term compliance and market shifts.
However, on 3 March, the European Commission unveiled its Industrial Action Plan for the automotive sector. These proposed measures aim to support the industry’s competitiveness and transition to zero-emission mobility in the EU.
One notable proposal is the relaxation of the 2025 CO2 emissions targets for cars and vans. This extends the compliance period from one to three years, from 2025 to 2027. So, vehicle manufacturers now have greater flexibility to avoid costly fines.
European declines in 2024
European EV deliveries fell by 2.2% to 3.07 million units in 2024. This represented a 20.5% market share, compared to 21.3% in 2023.
The decline was mostly because of changes in EV subsidies. Schemes in France, Ireland and Germany were reduced during the year, especially for plug-in hybrids (PHEVs).
While Germany is considering a possible reintroduction of BEV incentives, given the current socio-economic situation, this may not be implemented. Even Norway, regarded as a leading market for EVs, ended its VAT exemption.
Furthermore, most legacy OEMs could stay safely below their CO2 limits without selling more EVs. There was even a clear year-end push on ICE vehicles in many markets. This meant these models would not count towards the lower average emissions targets from 2025.
EV sales to rise
Yet there are some positives for the EV market. Many more affordable BEVs, such as the Citroen e-C3, are being rolled out. Global EV-leader BYD also has expansion plans for the region. Other Chinese vehicle manufacturers are also weighing up European expansions.
Considering the changes to the EU CO2 emissions targets, EV Volumes forecasts that European EV sales will increase 15.1% year-on-year in 2025 to 3.53 million units.
This equates to 23.4% of all light-vehicle sales, higher than the previous year’s share. It is also more than the EV market’s hold in 2023. BEV volumes are forecast to grow 20.6% year-on-year, with the technology accounting for 72% of the 2025 EV sales mix. PHEV sales are only forecast to grow by 2.9%.
The EV market is expected to grow further in 2026. This is due to the rollout of new plug-ins, lower prices, and lower EU CO2 emission targets. The powertrains are forecast to take a 26.4% share of the European light-vehicle market next year. One in three new vehicle registrations in 2027 are expected to be an EV.
Moderate growth for BEVs
The proposed amendment to the EU CO2 emissions targets requires approval from all member states. However, EV Volumes anticipates its implementation. There have also been discussions about amending the 2035 ICE ban to potentially exclude PHEVs. However, such measures were not included in the current action plan.
EV Volumes forecasts a moderate share growth for BEVs in 2025 and 2026, with a more significant increase in 2027. This will come as manufacturers aim to achieve average CO2 emissions levels of 93.6g/km for cars between 2025 and 2027. Meanwhile, LCVs will need to reach 153.9g/km over the three-year period.
EV Volumes calculations suggest that to meet these targets, the BEV share of light vehicles in the EU needs to average at least 20% between 2025 and 2027. This equates to around 20.5% for passenger cars and 18% for LCVs.
Without additional stimulus, manufacturers are not expected to meet this average target for all light vehicles over the three-year period. This is largely due to the slower pace of LCV electrification.
However, it is anticipated that the targets will be reached as an average between 2025 to 2028. There might still be additional exemptions, lower targets or new incentives, either EU-wide or at a national level. Any implementation of new subsidies would lead to an increase in the BEV share outlook.
Trouble with tariffs
Volumes in 2025 could also be affected by the implementation of tariffs on BEVs imported into the EU from China.
On 31 October 2024, duties came into effect following discussions with Chinese authorities and a vote by EU member states. Carmakers were handed differing tariff levels depending on the discovered subsidisation of value chains by the Chinese government.
Tesla announced a price increase of about €1,500 for the Model 3. Nio and Xpeng stated they would not change prices in the EU. Meanwhile, BYD is expected to absorb the tariffs without increasing prices. SAIC previously stated it had sufficient stock to supply the market with MG models until November 2024.
Falling lithium prices are also supporting OEMs’ ability to resist increasing prices of BEVs built in China. The impact on all-electric sales in Europe was negligible in 2024. However, EV Volumes has considered price changes, demand elasticities and reflected assumptions in the forecast for 2025 and beyond.
Changes in the EV forecast
Compared to the previous EV Volumes Europe forecast, the 2025 EV share and volumes have decreased. This is because manufacturers can meet EU CO2 targets over three years instead of striving to achieve them in 2025. The 23.4% share forecast for this year has, therefore, fallen by 1.3 percentage points.
EVs are expected to represent 60.5% of the market in 2030 and 93.1% of total sales in 2035. This includes some tolerance for timing interpretations of the ZEV mandate. It also allows for exemptions for ICE vehicles that may be deemed unsuitable for full electrification.
EV Volumes then expects the plug-in share of the European light-vehicle market to reach 99.4% in 2040.
LCV BEV struggles
The uptake of plug-in LCVs still runs far behind that of the passenger car market. EV growth of 45.8% in Europe during 2023 was encouraging. However, the volume and share of electric LCVs suffered more than passenger cars in 2024.
High prices compared to diesel LCVs and limited range have hindered uptake. Yet, there are all-electric products on the market, such as the Ford Transit, Renault Trafic, and VW Transporter. In addition, upgraded versions of the small, medium, and large electric vans offered by Stellantis brands will bolster demand.
EV Volumes expects EVs will make up 8.1% of the new LCV market this year from 5.4% in 2024. It will then reach 10.9% in 2026 before rising to 47.8% in 2030.
In the long term, the 2035 ICE ban will further accelerate the transition to pure-electric LCVs. The forecast assumes that all Western and Central European markets will follow the directive, allowing for some exemptions and grace periods.
Therefore, BEV adoption in the LCV market will not reach 100% in 2035. However, it is forecast to take a 90.5% share of LCVs, compared to 91.4% for passenger cars. In 2040, EV Volumes projects that the BEV share for both cars and LCVs will be 99.1%.
The role of e-fuels and other CO2-neutral ICE fuels is still uncertain. These propulsion methods will likely be limited to niche concepts, which will also depend on national tax regimes. EV Volumes expects the deployment of hydrogen fuel-cell vehicles (FCEVs) to be limited for LCVs, with their share peaking at just 0.01%.
