Amid reports of Europe’s electric vehicle market slowing down, industry experts are optimistic that there is no cause for alarm. In fact, some have even called the electric car demand slowdown a “myth.”

According to recent data from the European Automobile Manufacturers’ Association (ACEA), sales of new battery electric vehicles (BEVs) in the EU dropped 12% year-on-year to 114,308 units in May. This was primarily driven by drops in major markets, especially Germany.

However, Quentin Willson, founder of campaign group FairCharge, argues that looking at short-term data is “always misleading.”

“Yes, there’s been a fall in European EV sales, but there have been economic headwinds across the Eurozone that’s changed buyer sentiment along with a persistent anti-EV narrative from the Right,” Willson tells Kallanish.

Echoing similar sentiments, James Frith, head of Volta Energy Technologies’ European operations, notes: “The reported slowdown in EV sales reflects the wider issues in the economy today, with high interest rates putting consumers off big purchases. So as interest rates start to ease, we will probably see a natural recovery in EV sales growth.” 

Brussels-based campaign group Transport & Environment (T&E) says it is a “myth” that the electric car demand is slowing across Europe. It states the current “stagnation” of the EV market has been expected for years.

“The media reports coming out at the moment would suggest that actually, the number of EVs being sold has fallen, and that’s just not true,” Matt Finch, UK policy manager at T&E tells Kallanish. “What has happened is the number of EVs being sold is steadily still rising, just not as quickly as it was before.”

“So call it what you want, but actually, every month, there are more and more EVs added to Europe’s roads, and that is a good thing,” Finch adds.

For T&E, the European EV market is currently between two growth phases: stagnation and growth. One reason for the current stagnation is the “stop-and-go” design of the EU car CO2 targets. In other words, due to the 5-year step design of the targets, carmakers wait until the “last minute” to comply with the targets, leading to an “acceleration-stagnation” or “stop-and-go” momentum on the market, the organisation says.

In this phase, carmakers focus on maximising profits from existing internal combustion engine (ICE) vehicles and holding back on the sales of EVs. They also prioritise the sale of high-margin, expensive EVs for short-term profits. 

“If the OEMs [original equipment manufacturers] and their dealers aren’t pushing EVs –sales obviously slow,” adds FairCharge’s Willson.

And this is not new. A similar cycle happened in 2019 when model launches were delayed and EV sales were “suppressed” in the run-up to the 2020/2021 car CO2 targets, T&E explains.

In 2024 too, carmakers are cutting EV production, delaying launches, and pushing the most expensive and large versions of electric cars. The Renault 5 model, for example, will initially be delivered this December in the two highest trim versions, starting at €33,490 ($35,841). Meanwhile, the cheaper, sub-€25,000 version of the model will only launch in 2025.

One could argue that this is because carmakers are working through economies of scale to reduce costs and increase margins on cheaper products; or simply a reflection of customer preference and demand.  

Yet, T&E highlights that while in 2021 the average price of BEVs was €28,000 and the share of large EV sales was around 40%, the average price increased to over €40,000 in early 2024. The share of sales of large EVs also rose to around 60%. This is despite the average price of batteries dropping from $150/kilowatt-hour in 2021 to $139/kWh in 2023.

Another reason behind the current EV slowdown is the shift in incentives. Carbon Brief’s senior policy editor Simon Evans cites the abrupt end of German subsidies last year. Berlin used to offer up to €4,500 for the purchase of a new BEV. In May, Germany saw a 30.6% decline in BEV sales, ACEA data shows.

“Many other European countries have also withdrawn support at a time when we are reaching the crucial step away from early adopters, when incentives to drive electric could arguably be stronger to encourage a quicker adoption of EVs among a more reluctant set of stakeholders,” adds Matt Adams, transport policy manager at the Association for Renewable Energy and Clean Technology (REA).

Furthermore, growing misinformation about EVs across Europe is also impacting the industry, suggests Finch. “It’s unbelievable… My favourite one is that electric vehicles are more expensive to run than petrol vehicles. That’s simply not true. Another one is that EVs can’t go very far or the charging infrastructure doesn’t work,” he says.

“There’s more than a million electric vehicles in the UK right now,” Finch continues. “Go and speak to actual EV drivers, and they all say range anxiety disappears within a day of driving a vehicle; it’s just like a combustion car.”

Market to grow in 2025

Amid the current market trends, industry experts unanimously believe the European EV sector will grow in 2025.

Volta’s Frith predicts the region’s EV industry will receive a boost next year. “As limits for fleet-wide tailpipe emissions standards are tightened, this will force OEMs to increase the share of EVs in their sales mix to reduce their overall emissions profile or face large fines,” he explains.

Essentially, a manufacturer will be rewarded with less strict CO2 targets if its share of zero and low-emission vehicles registered in a given year exceeds 15% from 2025 and 35% from 2030.

So, by now holding back affordable, mass-market EV models, carmakers are building higher demand for these cars in 2025 than what would have been the case if these deliveries started in 2024, T&E suggests. In fact, 10 affordable EV models are expected to be launched between 2024 and 2027, driving the next growth phase.

“With the up-front price premium shrinking fast and running costs already way below combustion engine cars, there’s every reason to expect growth to resume next year,” says Carbon Brief’s Evans. 

According to the International Energy Agency, the EV sales share in Europe is anticipated to rise from 21% in 2023 to 31% in 2025. The agency forecasts a further increase in share to 60% in 2030 and 87% in 2035.

“Over the next decade, we would expect to see a rapid acceleration of EVs as we achieve price parity and as the cost of running an EV becomes cheaper than that of a petrol or diesel vehicle,” says Adams.

With strong optimism, Finch adds that every vehicle on Europe’s roads will be electric in the long term – “that’s a done deal.” That said, both Adams and Finch agree getting there would still need tackling the current misinformation surrounding EVs.

“A coordinated information campaign must be at the forefront of any effort to encourage growth in the European EV market,” notes Adams. “Whoever finds themselves in power post elections [across Europe] must also ensure that they are actively combating misinformation and providing public information campaigns around the truth and benefits of EVs.”

T&E says European carmakers “have been asleep at the wheel for too long. But the race is not over.”

To succeed, European carmakers and politicians must first commit to the 100% zero-emission car target in 2035 and boost the ramp-up of affordable electric car models. Secondly, the EU should support local EV manufacturing with a green industrial plan, the organisation adds.

“As the market evolves, the focus of the industry must balance profitability with the urgent need to address climate change and enhance global competitiveness,” T&E concludes. “The next few years will be crucial in determining the trajectory of the EV industry, with 2025 marking a pivotal moment in its development.”