Europe’s electric car market reached a new high point in 2025, with battery electric vehicles accounting for 19% of new car registrations—up four percentage points from 2024 and marking the strongest growth since 2021. This expansion played a central role in reducing average CO₂ emissions from new cars, leaving automakers just 4 g CO₂/km from compliance with their 2025–2027 targets, despite added regulatory flexibility that eased near-term pressure. Electrification is uneven across the region: Nordic countries and the Netherlands surpassed a 50% electric share, Germany and France reached around 30%, and southern markets like Italy and Spain continued to catch up. Major manufacturers, including Volkswagen, BMW, and Renault, significantly increased BEV sales, narrowing compliance gaps and signaling that EU emissions rules remain effective in steering market outcomes. Still, Europe now faces growing competition from faster-moving emerging markets, underscoring that maintaining regulatory certainty will be critical if European automakers are to keep pace in an increasingly globalized EV transition.

China is one of the three regions we cover in our EV Evolutions Research Project, along with the US and the EU.  As we begin our preparation for our 18th Annual Inside China Conference on November 19th, we watch as China is slowly reducing subsidies for new vehicle purchasing.  While in the US, government subsidies for new EVs have been cut as have some regulations supporting fuel economy.  But over in the EU, there continues to be financial support for EVs as noted in this research report from the European Automobile Manufacturers Association (ACEA).  Though the support differs dramatically across EU countries, all of them offer some form of support, sometimes non-financial support like China used to by issuing green plates that provided driving benefits in cities.

It’s sometimes forgotten that China has been providing subsidies to the EV industry and also consumers since at least 2012.  One of our research reports from 2019, “ The Trajectory of China's New Energy Vehicles Policy,” (https://lnkd.in/gE9hT64c) described in detail the variety of financial subsidies, non-financial incentives, and regulations that supported the development of NEVs in China.

So, over a decade of development of the minerals and processing of materials for batteries, support for the development of battery companies, and financial, non-financial incentives, and regulations have brought China leadership in the EV supply chain.  

That’s right.  Find ways to locate problem areas in an EV battery and introduce self-repairing battery technologies.  This is the hypothesis of the work going on at the Fraunhofer-Gesellschaft Institute for Silicate Research ISC in Germany.  We see lots of research projects in labs that talk about revolutionizing battery technology, but very few make it into real life battery production.  This may be the case with self-repairing batteries, but it is a topic we have not seen in the literature.  (The Europeans also talk about finding ways to repair batteries in general rather than self-repairing.)  We haven’t heard anyone else discussing this topic.

The article (https://lnkd.in/gGsNe_4E)  talks about the approaches they are working on: they introduce complex sensors that report individual battery problems, and “when the battery’s brain decides repair is needed, healing is activated. This could mean squeezing the battery back into shape, for example, or applying targeted heat to trigger self-repair mechanisms inside.  The idea is that under thermal treatment, some unique chemical bonding will bounce back.”  This is a new approach we haven’t heard before.  It will be interesting to see what becomes of it.  The idea of battery repair could be a game changer in EV longevity.

This report comes from our EV Evolutions researcher Sofia Audet-AbdulNour who focuses on US and EU EV technology, policies, products, charging, and company strategies.   

The recent Salone Auto Show Torino in Italy showed BEVs and PHEVs from the US, Europe, South Korea, and China.  Though there were no new introductions, this selection of vehicles shows the wide variety of BEV/PHEV options in terms of segment and price range.

Thanks to our new University of Michigan Research Opportunity Program Research Assistant, Sofia Audet-AbdulNour, for her work on this slide deck.  She’s focusing on EVs and PHEVs in the EU and the US as part of our EV Evolutions Research Program.  

At the recent 33rd Annual GERPISA colloquium in Shanghai, China, Angelica Sbardella from the Enrico Fermi Research Center in Rome presented her group’s recent research on the automotive competitiveness within the EU from 2007 to 2024. Considering all the new EV activity in the EU with battery plants and Chinese manufacturers and suppliers building their presence, it comes as no surprise that central and eastern Europe are gaining in automotive supply chain activity, as this graphic shows. Angelica and her group’s work on the EU automotive supply chain over time not only applies to the general auto supply chain, but also focuses on the EV supply chain in the EU. You can reach out to Angelica Sbardella (https://lnkd.in/gTvhn9Ji) and her co-authors Andrea Tacchella (https://lnkd.in/ggjbz_aA) and Aurelio Ostelli for more information on their very detailed report.

As a Steering Committee member for the GERPISA, the global automotive industry research group, Bruce Belzowski from Automotive Futures Group supports the annual conference as well as participates in their regular seminars. The recent conference in Shanghai was a great success, and we look forward to returning to Paris next June, 2026. 

The EU is doubling down on EVs and batteries with its announced 3.8 billion euros plan to support the EV battery supply chain including battery production, critical raw material sourcing, and innovation in EV technologies. This support is above and beyond the EU’s Green Deal Industrial Plan that was adopted in 2021 to make the EU climate neutral by 2050. The Automotive and Battery Sector Support Plan is designed to help the EU compete with China as well as help the industry meet its goal of no internal combustion sales in 2035. This graphic shows all the parts of the industry that the plan touches including workers, battery innovation, charging, battery materials, competition with foreign battery makers, and even battery reparability.  We’ll continue to track these investments as we do with US and Chinese investments and policies via our EV Evolutions research project. 

This chart from the EU manufacturers association shows that from January through April of this year, the EU sold only 29 percent gas-powered and 10 percent diesel-powered vehicles, and that it sold 35 percent hybrid, 15 percent pure EVs, and 8 percent PHEVs. These are dramatic changes from a region that in 2016 was selling over 50 percent diesel vehicles. One can argue that hybrids and PHEVs have gas engines to support their batteries, but it still shows how a major region can change the buying habits of consumers through incentives, regulations on manufacturers and also competition from companies like Tesla and BYD. We follow the transition to EVs in China, the US, and the EU through our EV Evolutions research program. 

One strategy for avoiding tariffs is to build in the country where you sell.  Xpeng and Guangzhou Automotive Company (GAC)  have entered into a contract manufacturing agreement with Magna Steyr in Austria.  Magna Steyr has been a contract manufacturer since 2001 and currently builds the Mercedes-Benz (G-Class), BMW (5 Series, Z4), and Toyota (GR Supra).  

Xpeng and GAC will build SKDs (semi-knocked down kits) to start production in June of this year.  This program allows them to avoid full vehicle tariffs, but still pay the standard 10 percent duty on parts imports.  This strategy not only allows Xpeng and GAC to avoid larger tariffs, but it also gets them into the EU market to test their vehicles against their EU competitors.  The EU market is becoming extremely competitive with the introduction of Chinese brands, which will force domestic brands to compete on price, quality, and styling.

But the EU has not stopped investigating Chinese companies for potential unfair subsidies.  BYD and its Hungary plant are currently under EU investigation for unfair government subsidies.

With European manufacturers looking to have to pay major fines for not being able to meet their emissions goals for 2025, the EU’s European Commission has extended the time to 2027 for the manufacturers to meet continuing reductions in emissions.  The emissions goals for the 3 years don’t change, but the penalties, if any, won’t be assessed until the combined emissions from 2025 to 2027 are calculated.

This doesn’t give the manufacturers much time, but it keeps them from having to purchase emissions credits from Tesla or the Chinese manufacturers.  It also keeps the pressure on the industry to meet the 2035 zero emissions goal for all new light duty vehicles.

We know all the traditional manufacturers are struggling to make EVs profitably, primarily because they are designing and building gas vehicles at the same time they are developing EVs.  But they are also struggling because they cannot purchase batteries locally.  The EU, like the US, is still in the process of developing battery materials, processing, and production locally in order to manage their costs.  The Chinese have about a 10 year lead on all of these issues, so both the EU and the US are working hard to catch up, but it will take more than10 years if their respective governments do not provide more support. 

The Global Battery Alliance (GBA) announced the results of the 2024 “Battery Passport” pilot program. Contemporary Amperex Technology Co., Limited, GOTION HIGH-TECH, BYD, China Aviation Lithium Battery Co.,Ltd, and EVE Energy Co.,Ltd. as well as LG Electronics and Samsung Electronics batteries are part of the project.. The “Battery Passport” is an innovative initiative by GBA aimed at improving full lifecycle management of batteries. The Battery Passport acts as the digital twin of a physical battery, enabling transparent digital management across the entire supply chain of electric vehicle batteries including carbon footprint declarations and labels, and carbon emission data from upstream minerals and materials to battery production, recycling and reuse. Through the Battery Passport, consumers and regulatory bodies can easily and directly access relevant information about battery products, while governments can use the Battery Passport as an essential policy tool to promote the low-carbon, circular, and sustainable development of the battery industry.  There is no mention of verifying the data provided by battery manufacturers, so theoretically, companies can report whatever they want.  This will probably necessitate teardowns to understand the technologies involved, but there doesn’t seem to be a way of verifying the supply chain inputs and carbon emissions.  This could be a very important tool in future sustainability programs if verification is possible.  We discussed many of the key issues related to supply chain sustainability at our 2024 The Coming Automotive Supply Chain:  Sustainable and Profitable including the challenge of tracking all the carbon emission inputs across the automotive supply chain.

Who would have thought that the EU would use the same strategy that the Chinese used in the 1990s for technology transfer from foreign automakers to China?  But the Financial Times recently reported that the EU is considering requiring any Chinese firms, especially Contemporary Amperex Technology Co., Limited and Envision Energy to transfer intellectual property to EU firms if they want to receive any of the 1 billion euros that will be available for battery development in the EU.  We’ve already seen the joint venture program China used with foreign vehicle manufacturers playing out in the EU with the Stellantis-Leapmotor JV, but this joint venture was not a requirement as it was in China.  Nevertheless, it shows the EU thinking about many different ways of managing their relationship with China, beyond tariffs.  Of course, the Chinese could refuse the subsidies since they already have advanced battery technology, and see their technological lead as more important than EU subsidies.  But they could use the same tactics that the foreign automakers and suppliers used in China by not bringing over the newest and most sophisticated battery technology, while still making it look like they are sharing technology.  High levels of irony on display in the EU. 

The proposed 2025 French budget reduces subsidies for purchasing an EV by one third, with the remaining subsidies (~$7,000 per) going to households with average incomes while also continuing the EV lease program for low income families for as little as $109 per month.  The budget balances the subsidies with financial penalties for the sale of new vehicles that have high CO2 emissions.  So, the French continue to support EV ownership in the middle and low income classes where EVs need the most sales help.  The early adopters could afford the higher prices of EVs while also getting subsidies, but now the French are focusing on the next wave of potential buyers. 

An ICCT response to the European Commission’s proposed revision of CO₂ standards for cars and vans warns that weakening the 2035 zero-emissions target could significantly slow Europe’s transition to electric vehicles. By lowering the required emissions reduction from 100% to 90% and allowing combustion engine vehicles to remain on the market after 2035, the proposal could add at least one billion tonnes of CO₂ emissions and erode Europe’s competitiveness in a rapidly electrifying global auto market. Relaxed interim targets for 2030 and new averaging mechanisms are also expected to dampen investment in charging infrastructure and batteries.

The proposal would permit plug-in hybrids, biofuel and e-fuel credits, and green steel offsets as compliance tools, but ICCT researchers caution that these flexibilities risk undermining regulatory clarity. Real-world emissions from plug-in hybrids are far higher than advertised, and poorly defined material credits could allow manufacturers to meet targets without meaningful emissions cuts. While super-credits for small electric vehicles and new corporate fleet targets could help boost demand for affordable EVs, the ICCT stresses that strict caps and clear definitions are essential to prevent backsliding. Overall, the organization argues that Europe needs firm, unambiguous standards to maintain momentum toward a fully zero-emission vehicle fleet.

A new ICCT report finds that Europe’s transition to battery electric trucks will hinge on widespread overnight charging by 2030, with ultrafast megawatt charging playing a targeted but crucial role. As truck manufacturers work to meet EU carbon reduction targets, the report estimates that the EU will need 22–28 gigawatts of total charging capacity—requiring up to 175,000 private chargers and as many as 80,000 public chargers. While megawatt systems will account for nearly 15% of total charging power needs, they will represent just 2% of chargers, underscoring their importance for long-haul freight rather than everyday depot use.

Most charging is expected to occur at depots and rest areas, supported by 350 kW fast chargers that remain more economical and easier to deploy. Improved battery technology could further reduce megawatt charger demand by up to 40%, as trucks gain longer range and greater flexibility. Still, the report warns that strategic planning is essential: infrastructure must be built where it’s needed most, not just at scale.

To ensure readiness, the ICCT urges policymakers to streamline permitting, support grid upgrades, and enable anticipatory investments. The study aims to give industry and regulators a data-driven roadmap—prioritizing precision over speculation—as Europe prepares its freight network for a zero-emission future.

A decade after the Dieselgate scandal, Europe’s electric vehicle (EV) transition has accelerated to the point where carmakers are just 9 grams of CO₂ away from meeting the EU’s 2027 emissions target, according to a new report from the International Council on Clean Transportation (ICCT). Once a turning point that forced automakers to rebuild trust and curb pollution, Dieselgate helped catalyze Europe’s shift toward electrification, supported by stringent CO₂ standards and growing consumer demand. By mid-2025, fully electric cars reached a record 17% market share across Europe, while EU production rose from 80,000 in 2015 to 2.35 million in 2024, making the region a net exporter of EVs and the second-largest producer globally.

The report highlights several structural drivers underpinning this progress. Battery costs continue to fall, public charging has grown more than 45% annually since 2020 to over 1 million points, and lifetime greenhouse gas emissions of EVs are 73% lower than gasoline cars. With battery electric cars now the cheapest option to drive—costing €7.43 per 100 kilometers compared with €11.02 for gasoline—the consumer case for electrification is strengthening alongside environmental benefits.

Still, the ICCT warns that hesitation could undermine Europe’s competitive position as China-based automakers expand globally. While nearly half of EVs built in Europe already use domestically produced batteries, scaling up local battery supply remains a major industrial opportunity. The report concludes that Europe’s EV transition is firmly on track, but that consistent policy support and industry commitment will be essential to maintain momentum toward the 2035 phaseout of new combustion cars.

Denmark, Sweden, and Finland have emerged as some of Europe’s strongest electric vehicle (EV) markets, each building on distinct policy approaches and market conditions to achieve rapid uptake. By the first five months of 2025, EVs made up 66% of new passenger car registrations in Denmark, 60% in Sweden, and 56% in Finland, placing them second, third, and fourth respectively in Europe after Norway. Together, these Nordic countries highlight how high levels of economic prosperity, strong regulatory frameworks, and supportive infrastructure can accelerate the EV transition. Denmark’s growth was driven primarily by battery electric vehicles (BEVs), which accounted for 63% of new cars, supported by generous tax breaks on registration fees that make EVs significantly cheaper than comparable combustion models. Sweden maintained a balanced mix of BEVs (34%) and plug-in hybrids (26%), leveraging its long-standing bonus–malus system and corporate fleet incentives to encourage adoption. Finland also saw strong BEV growth (+18%), though overall passenger car sales declined, reflecting both market volatility and shifting consumer preferences toward electrification.

The market composition in each country also reveals important behavioral and structural drivers. In Denmark, leasing plays an outsized role—58% of all new cars were leased in 2024, with corporate buyers favoring EVs heavily under tax-advantaged company car schemes. Swedish adoption is shaped by geography: nearly two-thirds of EV registrations occurred in urban regions, though intermediate and rural areas are also showing notable uptake. Finland, by contrast, is seeing stronger adoption among corporate buyers than private households, helped by after-tax benefits on electric company cars and full exemptions from vehicle registration taxes for BEVs. Across all three countries, SUVs dominate the top BEV models, with the Tesla Model Y consistently ranking first and local automakers like Volvo performing strongly in Sweden.

Infrastructure expansion and housing patterns are reinforcing these trends. Denmark recorded the highest growth in public fast chargers in Europe in early 2025, while its high share of detached homes supports easy access to home charging. Sweden and Finland also continue to expand their public networks, with over half their populations living in detached or semi-detached housing, which facilitates residential charging access. Together, these factors—tax incentives, infrastructure growth, corporate fleet policies, and housing patterns—create a comprehensive environment favoring rapid electrification.

Taken as a whole, the experiences of Denmark, Sweden, and Finland illustrate both the diversity and commonality of successful EV transitions. Despite differences in tax design and market structures, each country demonstrates how combining fiscal measures, infrastructure support, and targeted policies can push EV shares well above the European average. With EV penetration already exceeding 50% of new car sales, these Nordic markets not only serve as regional leaders but also as testbeds for policies that other European countries may adapt as the EU pursues its broader climate and transport decarbonization goals.

This article (https://lnkd.in/e_tW-YQu) from Automotive News Europe about how pricing of EVs that come under the new EU tariffs on Chinese-made EV imports offers the first glimpse of how the various tariffs will play out in the short term.  As researchers rather than reporters, we don’t want to make too much of short term reports or estimates, because tariffs are a long game.  The EU is trying to give its EV makers a chance to catch up to the Chinese brands, much like the US is doing with its 125 percent tariffs on Chinese brands.  (The US story is more complicated because of the national security issue of connected vehicles.)  But it’s interesting that the biggest selling Chinese brand is SAIC’s MG brand that has the biggest tariff yet is selling mostly gas, hybrid, and plug-in hybrid vehicles that don’t fall under the tariff.  In some ways the entrance of the Chinese brands into the EU is similar to the Japanese entrance in the 1980s.  Tariffs at that time incented the Japanese to build in Europe (and the US).  Will the same thing occur in the 2020s?  There are differences in the Japan and China cases, but in the end, countries want as level a playing field for competing as possible in order for their local brands to compete. 

We tend to ignore monthly changes in sales in favor of half and full year numbers, so the first half of 2024 in the EU has been very interesting for EV sales. The largest selling vehicle in the world in 2023, Tesla’s Model Y, continues to dominate EU EV sales.  Though its sales are lower than the same time last year, it’s selling 2-4 times more vehicles than its competitors.  The Model Y’s smaller companion, the Model 3 sells half as many vehicles but is up 37 percent over 2023.  These two vehicles continue to dominate EV sales in the EU (despite continual challenges from locals against the building of a new battery plant next to the Berlin assembly plant). The other vehicles in the top ten vehicle sales are all selling around 20 or 30K vehicles each.  Some interesting stories include the introduction of the Volvo EX30 which is in third place behind Tesla. Obviously, it is having some success with EV buyers.  It’s important to remember that volvo and MG are Chinese brands, though they have European brand names. So, the Chinese have three of the top 10 EVs in terms of sales for 2024 H1.

The European Union tracks emissions from vehicle emissions and fuel economy for vehicles on the road since 2021 through an onboard monitoring device.  With a recent sample of 600,000 vehicles, the real-world CO2 emissions for plug-in hybrid vehicles (PHEVs) were on average 3.5 times or 350 percent higher than the laboratory values, which confirms that these vehicles are currently not realizing their potential, largely because they are not being charged and driven fully electrically as frequently as assumed.  The data for gas and diesel vehicles also had emissions about 20 percent higher than official values.  This is not the first report of the misuse of PHEVs from an emissions standpoint.  Some people think that PHEVs will help lead people to EVs, but it looks like people are not plugging in as they should.

Our upcoming 16th Annual Propulsion Strategies for the 21st Century conference on July 17th will focus on the Future of EV Charging. One thing that is obvious in the US and the EU is the need for more charge points if companies and governments expect people to buy EVs. Both public and private charge points are needed with the EU auto manufacturers association predicting that the EU needs eight times as many charge points than are available today if they are to support the growth in EVs that they expect and hope for. This article, https://lnkd.in/grrvwZ9X, is part of our EV Evolutions program that follows development of EVs in China, the US, and the EU.

This article from Electrek, https://lnkd.in/gDxyKZ68, reports on the second study out of the EU that shows in real world tracking that plug-in hybrid owners are not plugging their vehicles in, leading to an over 200 percent increase in CO2 emissions compared to their expected emissions from government lab tests.  Real world testing is now common at global government laboratory testing labs, but these tests cannot account for owners who do not take advantage of a vehicle’s capabilities.  So, vehicles such as plug-in hybrids need a technical solution that requires owners to plug in, probably if they exceed a certain number of miles and after multiple warnings.  This may be the only way to guarantee plug-in hybrids come close to meeting their regulatory estimates.  Failing that, they should not be allowed to receive fuel economy/emissions incentives.  The technology hasn’t failed, but the application of the technology is failing.  This research is part of our EV Evolutions project that tracks EV developments in the US, EU, and China.

A recent article from InsideEVs discusses early talks among the EU’s major automakers aimed at co-EV development in order to reduce costs and meet the challenge of Chinese EV automakers who are selling EVs at prices much lower than their EU counterparts.  This is an EU industry response to the initial investigations of Chinese government support for their automakers by the European Commission.  The article brings up the interesting comparison of how EU countries banded together to form the airplane manufacturer Airbus to compete against Boeing.  Airplanes are different from autos because they produce very few variants or models while autos require nearly annual model improvements.  Can a group of major automakers in Europe work together to develop one or two EV platforms that all can share but still be able to design their own exteriors and interiors?  In the US, when US automakers were forced to build small cars to meet emissions and fuel economy regulations in the 1970s, they each initially tried to go it alone, but soon decided they needed to form joint ventures with Japanese automakers in order to learn how to make better quality vehicles less expensively.  All of these EU automakers already have Chinese joint venture partners in China, so one would expect that they already know why Chinese vehicles are less expensive.  It may be government support or less expensive labor or a combination of reasons, but can co-development among the EU automakers actually lower vehicle prices?  We will have to wait and see if it does.

Automotive News Europe predicts that in 2023, Tesla’s Model Y will be the EU's best-selling model.  Think about it.  Some of the world’s largest global manufacturers sell in Europe, yet it is Tesla’s Model Y that is the sales leader for all of 2023.  It will be the first electric car to finish number one; the first midsize car to finish number one, the first premium car to finish number one, and the first non-European car to finish number one.  EU EV sales for 2023 may reach 25 percent, which makes it close to China in overall EV market share.  Much of EV success in the EU is due to government incentives, but for just one model to lead over all other models is significant.  It speaks to the design, pricing, and marketing of the Model Y as well as higher gas prices that have led Europeans to favor smaller, diesel vehicles in the past.  The Tesla lead may not last through 2024, but it will be very interesting to see how the competition reacts over the next few years! 

Read the full article at: https://lnkd.in/ec3PeWuj

This article from Automotive News Europe describes how France is not waiting for the EU to address surging Chinese EV imports by limiting incentives for all vehicles produced using fossil fuels to power manufacturing plants.  This regulation will apply to nearly all Chinese vehicles imported into France but also some vehicles by EU companies that are importing their EVs into the EU.  This regulation is an example of how countries will tweak regulations to make sure EV subsidies work in the way they expect.  This may also apply to the US as it applies its Inflation Reduction Act incentives through 2032.  Though China recently passed Japan as the largest vehicle exporter, the French regulation will probably not cause any major changes in Chinese export policy (though they may retaliate against French companies importing products into China).  China’s energy policy will most likely take precedence over vehicle exports.  China needs more electricity domestically, and it continues to build coal-fired power plants while at the same time trying to meet greenhouse gas emissions goals by transitioning to EVs.  It’s a conundrum for China that will take years to play out. 

Read the full article at: https://lnkd.in/ggqR2mNf

Our EV Evolutions project tracks EV issues across the EU, US, and China.  These graphs show the continued growth of EV/PHEV sales in selected EU countries.  This is a good sign for the EV industry.  One thing we worry about is the availability of the minerals for batteries if there is a huge jump in growth globally.  The US and the EU are just beginning their exploration of local minerals for batteries while China locked up their sourcing and processing many years ago.  This has provided China with a strong leg up in the current market, but as the other countries ramp up their mining and processing of minerals for batteries, China’s dominance will be challenged.  The question will be when will this happen.  Many analysts predict it will take a decade to get things moving, and the Inflation Reduction Act is supporting this development in a big way with billions of dollars of support.  It took about a decade for China to develop their supply chains, so we will keep an eye on these developments.  What is somewhat different for the US and the EU is the strong recycling component of the battery value chain that is developing along with mining and processing.  Both regions have long histories of recycling and many of the new battery recycling players have already proven their ability to recycle nearly 90 percent of the battery.  This could lead to less need for new mining in the long term, but we shall see.