Increased activity in the European automotive industry is being driven by environmental focus, consumer demand, and government incentives.
European demand for new all-electric passenger vehicles has practically tripled in the last year, from 63,422 in Q2 2020 to 210,298 in Q2 2021, representing an increase of 231.58%.
Demand for hybrid electric vehicles also surged 213.54% in the same period, with 541,162 new vehicles being registered. When compared with the previous year’s figures, hybrid electric emerges as the category with the greatest number of new registrations among all new passenger vehicles in Europe. The figures on EU new passenger car registration, provided by the European Automobile Manufacturers’ Association (ACEA), reveal that the total registration of new electric vehicles in Europe has more than tripled, from 236,015 in Q2 2020 to 751,460 in Q2 2021.
Data on new vehicle registrations by fuel type in the first six months of 2021 show shares of 6.7% for battery electric, 8.3% for plug-in hybrid, and 18.9% for hybrid electric. The highest shares still go to traditional fuel sources, with diesel at 21.7% and petrol at 42%.
Catalysts of EU electric vehicle demand
The European Commission has targeted 2050 as the year by which to achieve a climate-neutral economy and in the meantime has established strict requirements on vehicle emissions as the market expands. This has certainly fuelled the increase in demand for electric vehicles, while also driving car manufacturers to invest in rapid development of electric options that meet the new policy requirements.
In Europe, traditional and established manufacturers are increasing their product offer in the electric sector, alongside the contributions of emerging new players. The net result is an ample choice of vehicles to satisfy the increasing European demand. With Europe now committed to climate neutrality, most European governments have set up environmentally-friendly incentives in a range of sectors, for both manufacturers and consumers. Many of these incentive schemes involve consumer bonuses in the electric vehicle market, driving the current surge in demand. Supply chain difficulties caused by the global coronavirus pandemic did result in a global chip shortage that affected the automotive industry, but this shortage should be resolved during the second half of 2021.
EU electric vehicle industry in the future
Electric vehicles are very expensive, and the vast majority of consumers cannot afford one unless that cost is subsidised. Demand for petrol-fuelled passenger vehicles in 2021 stayed high for this reason. If the electric vehicle sector continues to see increased production and competition, sales will continue to grow. However, it is worth mentioning that most government subsidy schemes have limits and expiration dates, so the expansion of the electric vehicle market could reverse when the incentives run out. Manufacturing costs are still high, which is why manufacturers depend on government support and technological developments to assist their growth.