European Car Market Faces a Transition: The Rise of Electric Vehicles Amidst Economic Challenges in H1 2025
In the first half of 2025, the European car market faced significant challenges, with new car registrations dropping by 1.9% compared to the same period in 2024. This decline reflects a broader trend influenced by global economic pressures and shifting consumer preferences. Despite this overall downturn, electric vehicles (EVs), especially battery-electric vehicles (BEVs), continue to show growth, signaling an ongoing but complex transition in the automotive industry.
The BEV market share in Europe reached 15.6% in H1 2025, a solid increase from the 12.5% seen during the same period in 2024. However, while this growth appears promising, it still lags behind the European Commission's ambitious targets for EV penetration. The growth has primarily been driven by a handful of markets, with Germany, Belgium, and the Netherlands showing strong gains.
In Germany, for instance, BEV registrations surged by 35.1%, while Belgium and the Netherlands grew by 19.5% and 6.1%, respectively. However, France reported a 6.4% decline in BEV registrations, highlighting the uneven adoption of electric vehicles across different European countries.
Meanwhile, hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) continue to grow in popularity, particularly in traditional automotive powerhouse nations. In H1 2025, hybrid registrations surged to nearly 1.94 million units, accounting for 34.8% of the market share.
France, Spain, Italy, and Germany—all major European markets—witnessed significant growth in hybrid sales, with France leading the way with a 34.1% increase, followed by Spain with 32.8%, Italy with 10%, and Germany with 9.9%.
These figures suggest that despite the increasing popularity of BEVs, HEVs remain the preferred choice for many consumers due to their convenience, longer range, and lower upfront costs, especially in markets where EV charging infrastructure is still underdeveloped.
The growth of PHEVs is another notable trend in the European automotive market. In H1 2025, PHEV registrations reached 469,410 units, which is an 8.4% market share, up from 6.9% in the same period last year. The strongest growth in PHEVs came from key markets like Germany, Spain, and Italy, with increases of 55.1%, 82.5%, and 56.3%, respectively.
This indicates that PHEVs are increasingly being viewed as a practical solution for those who want the benefits of an electric vehicle but are still concerned about range anxiety or lack access to reliable charging infrastructure.
On the other hand, traditional petrol and diesel cars continue to lose ground in the market. By the end of June 2025, petrol car registrations had declined by 21.2%, with all major markets experiencing decreases. France saw the steepest drop, with registrations plummeting by 33.7%, followed by Germany (-27.8%), Italy (-17.2%), and Spain (-13.4%). This dramatic fall is a clear indication of the shifting consumer preferences towards more sustainable, energy-efficient vehicles, as well as the increasing regulatory pressure to reduce emissions.
While the overall growth of electric vehicles is a positive development, it is important to recognize the challenges that still lie ahead. The market share of BEVs, though increasing, is still below expectations. The transition to electric mobility is complex, and EV adoption rates are highly dependent on factors such as government incentives, consumer awareness, and the expansion of charging infrastructure.
For example, Tesla’s success in Europe can be attributed not only to its innovative technology and brand appeal but also to the supportive policies in markets like Germany, the Netherlands, and the UK, where robust charging networks have been built.
In the U.S., electric vehicle sales are also on the rise, with new EV registrations increasing by 28% in H1 2025 compared to the previous year. Tesla continues to dominate the U.S. market, but other automakers such as Ford and General Motors are rapidly expanding their EV offerings. Ford, for instance, has pledged to ramp up its electric vehicle production to 2 million units annually by 2026, aiming to capture a significant portion of the EV market.
The rise of electric vehicles in the U.S. also mirrors the European trend, with increasing support from both federal and state governments in the form of tax incentives and grants for EV buyers and manufacturers.
Meanwhile, in China, electric vehicles have become a dominant force in the automotive market. The Chinese government’s strong policy support and subsidies have helped propel EVs to a market share exceeding 30%.
Domestic manufacturers such as BYD and NIO, along with international brands like Tesla, have seen significant success in China, where the demand for electric vehicles continues to surge. The country’s focus on expanding its charging infrastructure and pushing for stricter environmental regulations is likely to further accelerate the adoption of EVs in the coming years.
Despite the rapid growth of electric vehicles, hybrids will likely remain a key part of the automotive landscape for the foreseeable future, especially in regions where charging infrastructure is less developed. PHEVs are emerging as a practical bridge between traditional combustion engines and fully electric powertrains, offering consumers the flexibility of both electric and internal combustion engine capabilities.
Looking ahead, the future of the automotive market will undoubtedly be shaped by the continued rise of electric vehicles, driven by advances in battery technology, supportive government policies, and growing consumer demand for cleaner, more sustainable transportation options. However, the transition will not be without its challenges.
Automakers will need to innovate, adapt, and invest heavily in research and development to stay competitive in a rapidly evolving market. Additionally, governments will play a critical role in ensuring that infrastructure, such as charging networks and grid capacity, can keep pace with the growing demand for electric vehicles.
In conclusion, the first half of 2025 has highlighted both the opportunities and challenges facing the European car market. While BEVs and PHEVs show promising growth, traditional petrol and diesel cars are rapidly losing their market share.
As the industry navigates this transition, the path to a fully electric future remains uncertain but undoubtedly exciting, with key markets like Europe, the U.S., and China driving the shift toward greener and more sustainable mobility solutions. The next few years will be pivotal as automakers and governments work together to address the challenges and seize the opportunities that lie ahead in the electric mobility revolution.