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Automakers have brought more than 160 models to market this year as Europe prepares for a resurgence in electric car sales, but executives have warned that profits could fall further due to regulatory costs and rebates.
increase in EV Sales across key European markets stalled last year as governments withdrew their subsidies and companies held off on new EV models until 2025 in anticipation of the continent’s tough new emissions rules.
Matthias Schmidt, an independent car analyst, forecasts that EV sales in Western Europe, including the UK, will rise by 40 percent to 2.7 million vehicles in 2025, as carmakers rush to meet CO₂ targets. He predicted that the share of battery-powered cars will reach 22 percent this year, out of the range of 15-17 percent of the total market. “We certainly expect the market to recover in 2025 due to the regulatory push from the EU,” he said.
But the return of EV sales growth will come with higher costs of meeting tougher emissions rules and more discounts as consumers seek affordable vehicles. With underlying demand still weak, executives said the overall outlook for the European car industry remained challenging at a time of growing Chinese competition and growing protectionism in the US.
“In terms of the offer between EVs and hybrids, we are ready,” said Fabrice Camboliev, who heads the Renault brand, where 13 percent of its sales are electric. “In terms of demand, we see signals that are very volatile. The hesitation level among our customers is really high.”
European car industry body Acea estimates that fines, carbon credit costs or losses on EV sales could cost carmakers €16bn if the fines are not delayed for 2025. Its preliminary data showed that new EV registrations in Europe fell by about 6 percent last year.
Shares in electric-car maker Polestar fell 11 percent on Thursday after it revealed it will take another two years to turn free cash flow positive and scale back its market expansion plans.
Schmidt expected more than 160 EVs to be available in Europe this year, including cheaper offerings under €25,000, such as the Renault 5 and Citroën ë-C3. The line-up includes 20 new models such as BMW’s Neue Klasse electric sport utility vehicle and Mercedes-Benz’s new electric CLA and Tesla’s updated Model Y. Released in China on Friday Will also go to Europe.
With a record number of product launches in the company’s history from 2025, Mercedes-Benz chief executive Ola Kallenius said the company will launch “a fireworks display of products, most of which will be fully electric”.
But he warned that “natural demand” from consumers is unlikely to grow to a level in 2025 that would allow the industry to sell battery-powered cars at healthy profit margins.
From this year, EU carmakers will seek to cut carbon emissions by increasing the share of electric cars they sell. Carmakers and analysts are closely watching the UK, which last year introduced its EV quota scheme that requires 80 percent of car sales to be zero-emission vehicles by the end of the decade.
Performance in the UK in the first year of EV targets gives an early indication of how regulatory pressure could affect sales and profits.
Registrations of new EVs rose 21 percent last year to a record 382,000, and the UK overtook Germany as Europe’s largest battery-powered car market for the first time.
However, to attract discounts on EVs Customers are reluctant Moving away from petrol cars cost carmakers billions of pounds. Despite the price cuts, businesses make up a large portion of EV sales with one in 10 private buyers opting for an electric model.
Mike Howes, chief executive of the Society for Motor Manufacturers and Traders in the UK, warned, “The amount of money available to stimulate demand will be under severe pressure while manufacturers have very limited resources.”
Analysts predicted that weak profits in Europe would drag down the global performance of carmakers. UBS forecasts earnings before interest and tax for European auto groups to fall 7 percent over 2024.
While companies have had a strong interest in selling more EVs this year, “the question is how much additional discounting will we see from automakers to sell more EVs”, said UBS analyst Patrick Hummel.
On top of the discounts and promotions, some manufacturers will face the additional cost of buying carbon credits from the likes of Tesla and Chinese rivals Which is ahead of electrical changes, to meet new EU regulations.
This month, Stellantis, Ford, Toyota, Mazda and Subaru announced plans to “pool” carbon emissions with Tesla, allowing them to buy emissions credits, while Mercedes-Benz wants to work with Geely-owned Volvo and Polestar.
Hummel estimates that these various measures, including discounts and carbon credits to meet the targets, will impact industry-wide profits by as much as €4bn.
While the European car industry has called on Brussels to make regulations more flexible, it also hopes the government will help revive consumer demand for EVs by reinstating incentives.
Registrations of new electric cars in Germany fell 27 percent last year after purchase subsidies were abruptly pulled until the end of 2023. France suffered a decline of 3 percent year-on-year and 21 percent in December alone
Some governments are beginning to take concerns around the targets, considering ways to make Britain’s mandatory EV sales targets easier to meet. France has suggested that carmakers should be spared large fines that would be imposed if they fail to meet EU emissions rules.
However, it is not clear where the political debate will settle.
In France, a popular leasing scheme for less affluent households to buy electric vehicles ends in February 2024, more than doubling the expected total in a year after 50,000 requests in two months.
Paris last month cut EV purchase subsidies from a maximum of €7,000 to €4,000 but as the French government failed to pass a budget for 2025, further support for EVs or fines for polluting vehicles remains unclear.
In Germany, uncertainty over subsidies has affected sales of electric cars
Gilles Le Borgne, Renault’s head of engineering, said the German government’s withdrawal of incentives was “immediate”. He added that above all, carmakers “need stability of public policy around electric cars” and “often it’s €1,000 or €2,000 [in support] That might change things one way or the other.”
