Europe’s electric vehicle (EV) sales have undergone a U-turn following sluggish performance in 2024.
While consumers are gradually becoming more confident in EVs, with battery ranges increasing and charging infrastructure expanding, the sudden uptick in EV sales is primarily a result of the 2023 EU carbon mandate, according to analysts.
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The regulation requires that, from 2025 to 2029, automakers cut fleet-wide CO₂ emissions by 15% compared to 2021 levels. It also set additional 2030 and 2035 targets. The move raised concerns within the industry that the timeline would be challenging and that heavy penalties could cause long-term harm.
Lobbying resulted in a rollback on penalties announced in May 2025, when the European Council approved an amendment providing flexibility via a three-year compliance period for 2025–27. The amendment replaced the annual targets with the aim of reducing potential fines. While the apparent leniency caused some controversy, subsequent sales results for EVs in Europe look positive as manufacturers strive to reach the new targets.
How the mandate shaped EV sales in 2024 and 2025
Research conducted by Eurostat, the statistical office of the EU, tracked lagging EV sales in 2024 and identified a 6.1% decrease in the registration of battery-only electric passenger cars in 2024 compared to 2023, with 1.45 million new registrations, compared to 2023’s 1.55 million.
The slowing sales are not necessarily a reflection of market demand, however. Al Bedwell, director of global powertrain at GlobalData, tells Power Technology that the EU’s carbon mandate contributed to slowing EV sales as manufacturers delayed launching new models to the market.
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By GlobalData“There was little point in OEMs releasing their shiny new BEVs [battery EVs] before the CO₂ target period commenced at the start of 2025,” he explains. “It would be counterproductive as, by the time it mattered, some of the strong sales momentum associated with new models would have already taken place.”
A lack of new models across the market coincided with a period of fewer incentives for buyers, as many European governments ended subsidies on BEVs. On 31 December 2023, Germany dropped its ‘Umweltbonus’ subsidy, which had offered grants of up to €6,000 ($7,058) for EV buyers, resulting in a predictable but significant drop in EV sales. The story was echoed in France, which scaled back its programme, limiting subsidies to higher-income buyers and reducing eligible vehicles. Elsewhere, the Netherlands’ EV grant fund was exhausted by November 2024.
However, Europe’s EV sector has seen an uptick in sales since the start of 2025. GlobalData research identified that by July, EU and UK BEV sales were up 30% year on year (YoY). Bedwell explains that “incentives have come back a bit, but the main reason is ‘push’ factors from OEMs – more affordable BEVs with attractive lease deals in response to the CO₂ target”.
It is a judgement echoed by Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E, who credits the BEV sector’s recovery to the carbon regulations. “The EV sales rebound shows that the existing EU target is working. Require carmakers to sell more electric cars and the buyers will come.”
There are other factors that have supported increased sales of EVs in Europe, with Bedwell pointing to the expanding public charging infrastructure, improving BEV offerings and an influx of competitive Chinese brands. However, he concludes that the CO₂ mandate has impacted sales “greatly”, adding that “without them, many OEMs might not even have entered the BEV space. For most people, internal combustion engine [ICE]-based cars fulfil their needs very well.”
Which EVs are selling?
Plug-in BEVs and plug-in hybrid EVs (PHEVs) were both hit by 2024’s downward sales trend. However, not every EV followed the same trajectory. Non-plug-in hybrids performed strongly, representing a good economy option at a period when consumers across Europe were tightening purse strings, and incentives felt few and far between. Non-PHEVs also offer the advantage of not being dependent on infrastructure, as do full hybrid EVs (FHEVs). Both saw significant growth in 2024 across the EU and UK; GlobalData noted that FHEVs grew 21% YoY and 48V hybrids grew 30% YoY.
Now, BEVs are enjoying a recovery and the European market is shifting as a result. In July, the market share of European EVs had increased by 29.4% YoY and GlobalData has noted a democratising trend in the market, with premium brand share having fallen from around 50% in the first half of 2024 to 39% by August 2025.
Bedwell expects the trend to continue, commenting: “Until recently BEV sales were overweight in the premium segment. Of course, that has to change if the entire market is to shift to BEVs, as required by 2035 by EU policymakers.
“Our forecasts for BEV sales indicates continued growth as CO₂ rules get tougher, technology improves, infrastructure expands and BEV prices come down. However, it may be a bumpy road.”
How the industry feels about the carbon mandate
The automotive industry is in general agreement about the need to shift towards EVs, but the carbon mandate, which requires automakers to sell only zero-emission vehicles by 2035, has been criticised by the European Automobile Manufacturers’ Association (ACEA) as “a regulatory cliff-edge” that risks forcing automakers to make decisions that prove to be detrimental in the long-term.
Concerns were raised at the European Commission’s (EC) strategic dialogue on the future of the automotive industry, where it was noted that manufacturers may need to introduce significant price cuts to meet the targets, destabilising pricing and the broader market.
In response to industry concerns, Carlo Zarcone, a press officer for the environment, climate change and energy department at the Council of the EU, tells Power Technology of the amendment finalised in May: “Following the presentation of the Industrial Action plan for the European automotive sector, on 5 March 2025 the European Commission put forward a targeted amendment to the CO₂ standards for new cars and vans… it basically allows manufacturers to balance any excessive emissions in one or two of these years [2025, 2026 and 2027] by outperforming the target in the remaining year(s).”
The regulation initially required that from 2025 to 2029, automakers would cut fleet-wide CO₂ emissions by 15% compared to 2021 levels, but they may now average their performance over the three-year period from 2025 to 2027. However, carmakers must still hit the carbon reduction targets, including the 2030 target for 55% lower emissions than 2021 levels for new cars and 50% for new vans.
These targets have also drawn criticism from major industry voices, which argue that they fail to recognise the severity of the challenges ahead. Mercedes-Benz CEO Ola Kaellenius and Matthias Zink, CEO of powertrain and chassis at Schaeffler AG, wrote to EC President Ursula von der Leyen in August, stating: “We want to make this transition work – but we are frustrated by the lack of a holistic and pragmatic policy plan for the automotive industry’s transformation.”
They pointed to issues including Europe’s near-total dependency on Asia for the battery value chain, as well as a lack of charging infrastructure, higher manufacturing costs and tariffs. Kaellenius and Zink added: “We are being asked to transform with our hands tied behind our backs.”
Yet some critics see calls for amendments as a signal that profit is being prioritised over the climate. T&E has criticised May’s amendment as a mistake, arguing that increasing EV (specifically BEV) sales in Europe was evidence of the mandate working, as the industry prepared to comply with the existing 2025 target.
Poliscanova comments: “It is a make-or-break moment for Europe’s automotive industry as the global competition to lead the production of electric cars, batteries and chargers is immense. Europe’s success hinges on the road that EU politicians take today. Keeping the 2035 zero-emissions goal alongside adopting strong industrial and demand policies is the EU’s best chance to return to greater car production, maintain job levels and increase the economic value of its auto industry.”
The EU carbon mandate is controversial, but EV sales figures so far tell a positive story of recovery in Europe, spurred by manufacturers looking to reach targets. Generally, the automotive industry appears to be on the road to transition and is planning to reach EU targets. However, the road ahead is bumpy, and obstacles including the high unit cost of batteries, motors and other parts, competition from China and the recent rollback on incentives from European governments need to be surmounted.
