Electric vehicles: after a flying start, the European market needs to step up a gear. A delicate manoeuvre
- It is often said that, in addition to being humanitarian disaster, the COVID-19 pandemic and the war in Ukraine are also pivotal moments leading to a more contentious and unstable world.
- Historians will be responsible for examining the consequences of these two crises in years to come. What is already evident is that many changes have accelerated recently, in the renewable energy, information technology and digital sectors.
A seismic shift originating in China
- The same is true for the electric vehicle market, which, while not new, is currently undergoing a significant transformation.
- The figures speak for themselves. Once relatively marginal in 2019, sales of electric and plug-in hybrid vehicles have increased tenfold over the past six years. In 2025, they will exceed 20 million units, representing nearly a quarter of global passenger car sales.
- Another noteworthy point, albeit not entirely unexpected, is that China is taking the lion's share of the market. In 2025, it will account for two-thirds of global electric vehicle production. This figure can be primarily attributed to the dominance of Chinese manufacturers in their own market, which is by far the largest.
- However, their presence is also becoming increasingly evident beyond China's borders.
In Europe, a market where competition is fierce
- With the US market now closed, the European Union, along with its 250 million motorists, have become a target. Starting from almost zero before COVID, the market share of Chinese electric vehicles has already climbed to 10%. In 2025, it continues to grow, due in particular to hybrid vehicles, which are subject to lower taxes from Brussels compared to their fully electric equivalents.
- For European manufacturers, the situation has become almost existential, especially since, following a significant surge, the market was less buoyant in 2024, impacted by a reduction in government subsidies.
- European manufacturers could see a modest recovery in 2025 and 2026, with the introduction of purchase subsidies accompanied by a Community preference in France and, soon, in Germany.
- However, it is difficult – if not unrealistic – to envision the electric vehicle market continuing to expand in Europe without significant involvement from China.
- With a technological lead of fifteen years over its competitors, a resolutely aggressive commercial strategy and control over the battery supply chain – starting from the extraction and refining of critical minerals – Beijing is, and will continue to be, a key player in low-carbon transportation.
- For the Asian powerhouse, the future of the single market – soon to be protected by a carbon border tax – will necessitate increasingly localised production and stronger partnerships. In any case, given that the electrification of transportation is a fundamental trend, the future looks bright for cars made in China.
