European car sales surge 10% but electric vehicle growth stays flat

Earlier this month, the Society of the Irish Motor Industry said Irish car sales jumped 25% in February, but the sales of electric cars fell from a year earlier. 

Car sales across Europe rose 10% in February as car makers, including Volkswagen and Fiat-maker Stellantis, fed off order backlogs, while the market share of electric vehicles stayed flat.

New-vehicle registrations rose to 995,059 units last month, the European Automobile Manufacturers’ Association said. 

Battery-powered cars did not manage to grab more share after demand fell in markets including Germany and Sweden. 

Car makers in the region had a solid start to the year, but elevated borrowing costs and a recession in Germany, the region’s biggest car market, threaten to turn off buyers. 

Some countries are also phasing out state-sponsored electric vehicle, or EV, incentives that for years bolstered demand.

CLIMATE & SUSTAINABILITY HUB

“Subsidies shouldn’t be eternal but we need them for now,” Renault chairman Jean-Dominique Senard said during a French senate hearing earlier this week. 

Germany’s decision in December to end subsidies “destabilises the EV market significantly and this risks leading to a certain downturn, notably for 2024”. 

Earlier this month, the Society of the Irish Motor Industry said Irish car sales jumped 25% in February, but the sales of electric cars fell from a year earlier. 

"This slowing down in electric vehicle sales is not unique to Ireland, and is reflective of other new car markets," the business group said at the time. 

Some countries are phasing out state-sponsored electric vehicle incentives that for years bolstered demand. Picture: John Walton

France last month reduced electric car subsidies granted to the wealthiest half of the population and suspended a state-financed leasing plan for poorer households. 

In Italy, customers are holding back purchases as they await the introduction of possible new aid flagged by the government. 

Germany’s electric car sales slumped 15% in February even as manufacturers such as Volkswagen tried to compensate for the country’s aid cuts with their own rebates. 

While a range of new electric models convinced a greater number of buyers in markets including France and Denmark, sub-par charging infrastructure remains a roadblock to more widespread adoption. 

Even a price war kicked off last year by Tesla has npt been enough to accelerate demand. 

Customers are increasingly turning to models with a battery and an engine: Sales of plug-in hybrid vehicles rose 12% last month, outpacing gains for not just fully electric cars but also models running on petrol.

Manufacturers including Mercedes-Benz and Audi are paring back their electric vehicle strategies as a result. 

Renault, which is banking on a major product revamp this year, has been talking with peers about partnerships to make more affordable electric cars. 

• Bloomberg and Irish Examiner