Hybrids Picking Up Battery-Electrics’ Sales Slack in Europe

BRUSSELS – Battery-electric vehicle sales are stalling in the European Union.

After growth in 2021 and 2022, sales figures (https://www.acea.auto/pc-registrations/new-car-registrations-3-in-may-2024-battery-electric-12-5-market-share/) recently released by the ACEA, the European automakers’ group, for the year through May show BEVs taking 12.5% of the EU car market, down from 13.8% the previous year. Meanwhile, sales of less-expensive hybrid-electrics grew from 25% to nearly 30% of the market. 

Germany, the 27-country bloc’s largest BEV market, saw the most dramatic decline, with a 30.6% slip in BEV sales, and even a 0.7% drop in hybrid sales, attributable to the government unexpectedly scrapping consumer subsidies for electric-vehicle purchases at the end of 2023.

“The subsidies being canceled overnight was a big problem. Consumers were quite shocked about this, as were car manufacturers,” Stefan Bratzel of the Center of Automotive Management (CAM) in Bergisch Gladbach, Germany, tells WardsAuto. 

“Demand for electric vehicles remains weak in Germany and is mainly due to the abrupt end of funding by the federal government and the weak overall economic development,” confirms Moritz Schmerbeck, spokesperson for the VDA, the German auto industry group.

Price seems to be the main brake on European BEV sales, especially for smaller cars. Bratzel says the “big gap” between the price of BEV and internal-combustion-engine models “is the most important hindrance in Germany.”  

However, two countries bucking the trend, Belgium and now Italy, offer significant incentives such as tax breaks and subsidies, lowering prices substantially and showing that government policies are key to buoyant BEV sales. BEVs made up 24.5% of Belgian new-car registrations at the end of the second quarter, compared to 23% in the first quarter, national trade association Febiac says.

Belgium’s robust figures – 77.7% of BEV sales – come largely from its Flanders region, where a Flemish government premium subsidy boosted registrations by private individuals by 157% in the first half of 2024 compared to the same period last year. Numerous leasing companies are based in Flanders, also inflating sales.  

Italy’s “Ecobonus” decree, effective June 3, already brought a 117.4% hike in BEV registrations last month compared to June 2023, while they dropped in other EU countries except Belgium, ACEA’s latest statistics show. Under the Italian scheme, incentives staggered according to income and scrapping polluting cars go up to €13,750 ($14,900) for consumers on low incomes, scrapping polluting vehicles meeting old Euro 0, 1 or 2 emissions standards when buying BEVs priced under €30,000 ($32,600). 

By contrast, 2024 changes to France’s “ecobonus” system to account for lifecycle emissions, which ruled out many cheaper Chinese-made vehicles, including the best-selling Dacia Spring (pictured, below), seem to have reversed an earlier increasing sales curve, with French BEV sales falling 10.3% in June compared to the year before. 

Dacia Spring’s low price doesn’t stop French BEV sales from slipping.

Bratzel criticizes automakers for failing to offer more BEVs in lower segments, citing as an example market leader Volkswagen, which he says “doesn’t have a good lineup.”   

Brussels-based European lobbying group Transport & Environment (T&E) similarly criticizes automakers for slowing the rollout of BEVs to the mass market by focusing on larger, more expensive vehicles and keeping prices high.  

But VDA’s Schmerbeck insists that “our manufacturers meet consumer demand with their product range, which extends from small cars to midrange models and SUVs. In total, German manufacturers already have over 130 purely electric car models on offer worldwide, and this year and next year there will be significantly more. There is a suitable electric car for every need.” 

Bratzel complains about shifting European government BEV incentive policies in general: “Consumers are a bit baffled,” about whether to buy battery-electric or hydrogen-fuel-cell vehicles, as European governments give “quite fuzzy signals,” he tells WardsAuto. He calls on politicians to “make clear there is only one dominant future propulsion technology.” Bratzel further suggests governments offer more “carrot and sticks” – taxation or other means of increasing the costs of ICE compared to BEVs. 

Charging infrastructure is also critical. Schmerbeck says “people’s confidence in electromobility must be strengthened again and consumers must be motivated to make the switch” and “to make this possible, the framework conditions are crucial, in particular a nationwide and efficient charging infrastructure.”   

As in the U.S., range anxiety remains a barrier to BEV sales across Europe: “The transformation towards climate-neutral mobility also stands and falls with people’s confidence in the ability to charge anywhere and at any time. Surveys show this time and again. There is no way around the rapid and consistent expansion of the charging infrastructure, especially the fast-charging infrastructure,” says Schmerbeck.  

But, both Bratzel and Schmerbeck suggest range is more a perceived than a real problem because, says Bratzel, “on long trips the situation has got better,” noting that both range and charging speed has improved. According to the European Alternative Fuels Observatory, over 70% of recharging is done at work or home in Europe, costing less, though taking longer. 

Schmerbeck points out that “many people overestimate their mileage and actually drive rather short distances in everyday life.”  

However, many central and eastern European countries “are drastically underserved” by public charging points, ACEA director general Sigrid de Vries notes in a May 31 blog. “The deployment of public charging points needs to dramatically pick up pace,” says de Vries, noting that “almost two-thirds of EU charging points are concentrated in just three member states – the Netherlands, France, and Germany. Investment in electric trucks for long-haul trips also is “massively discouraged by insufficient and inadequate charging networks,” says de Vries. 

Looking ahead, EU countervailing tariffs on Chinese-made BEVs imposed July 5 also could dampen sales among price-sensitive consumers, if the duties of up to 37.6% are passed on to customers. Tesla July 10 already announced a €1,500 ($1,622) price hike for its Shanghai-built Model 3 in several European countries, including Germany, the Netherlands and Spain.  

Also, with fleets accounting for 58% of European vehicle sales, T&E says better EU company-car taxation policies “would drive corporate fleet electrification.” 

Schmerbeck says Germany’s promotion of electric vehicles through company-car taxation saw the share of company cars in all newly registered electric cars in Germany rise to 44.8% in 2023.  

And Febiac notes the Belgian company-car taxation regime pushed corporate BEV registrations to 34.4% of the market at the end of the second quarter, compared to 31.6% in the first. 

But de Vries also warns that Europe’s BEV transition is “curtailed by a fragmented internal market when it comes to EV incentives” and having 27 or more uncoordinated schemes.