Falling electric vehicle (EV) sales in Germany have dealt a significant blow to the European market, with the region experiencing a downturn in 2025, as Chinese automakers continue to outpace their Western competitors.
According to data from Rho Motion, EV sales across Europe dropped by 3% to 3 million units last year. This decline follows the withdrawal of government tax breaks in Germany, which resulted in a dramatic drop in sales in the country.
In stark contrast, China saw a 40% surge in EV sales, with 11 million vehicles sold. North America also experienced growth, with sales rising 9% to 1.8 million.
Charles Lester of Rho Motion highlighted the widening disparities in the global EV market, emphasizing that while the market has grown, regional differences have become more pronounced. “What is clear is that government incentives and regulations are playing a key role,” he stated.
Lester pointed to consumer subsidies in the United States, such as those provided under President Joe Biden’s Inflation Reduction Act, as a key driver of growth in the country. Meanwhile, he attributed the rise in EV adoption in the UK to the controversial zero-emission vehicle (ZEV) mandate, which required at least 22% of carmakers’ sales to be electric by 2024. This policy helped the UK achieve a 20% increase in sales, surpassing Germany as Europe’s largest EV market with over 400,000 units sold.
In contrast, Germany’s decision to remove subsidies had a “devastating” impact on the European market, according to Lester. He warned that if the U.S. were to follow a similar path, it could face similar setbacks.
While the full-year car registration figures for Germany have not yet been released, preliminary data from the European Automobile Manufacturers’ Association for January to November 2024 shows a sharp decline of 26% in EV sales, with 347,048 units sold – a decrease of 122,517 vehicles compared to the previous year.
Matthias Schmidt, of Schmidt Automotive Research, explained that the drop in sales in Germany was largely due to a rush of motorists purchasing EVs to take advantage of government subsidies before they were cut. The peak of this surge occurred in 2022 when subsidies reached €9,000 (£7,550) per car.
Many consumers opted for three-year lease deals, which will be expiring in 2025, suggesting that these drivers will be looking to replace their vehicles in the near future. Additionally, some manufacturers delayed EV deliveries until 2025 to align with new European Union emissions standards.
Schmidt indicated that 2024 might represent a “low point” in the cycle, with the market expected to rebound by the end of 2025 as leases expire and drivers return to the market. He also noted that automakers likely reduced supply in late 2024 to prioritize vehicle deliveries for the stricter EU emissions regulations that will be in effect through the end of the decade. “It would have been foolish to deliver those vehicles in 2024 and risk missing the carbon dioxide targets due in 2025,” he concluded.
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