European car sales rise as EV demand gains momentum

[BRUSSELS] European car sales edged higher last month as consumers rotated to buying electric vehicles, taking advantage of new subsidy programmes and picking from a growing range of affordable models.

New-vehicle registrations rose 1.7 per cent in February from a year earlier to 979,321 units, the European Automobile Manufacturers’ Association said on Tuesday (Mar 24). Sales climbed in Germany, Spain, Italy and the UK, offsetting a decline of nearly 15 per cent in France.

The rate of EV growth outran steep declines for fuel-burning cars. Sales in Germany for vehicles with a plug jumped by a combined 27 per cent after low- and middle-income earners started to tap into a new subsidy scheme. In France, battery-only car demand surged 28 per cent, while sales for petrol, diesel and hybrid-powered vehicles fell.

Driven by new models like Renault’s electric R5 compact car, Skoda’s Elroq mid-size SUV and BYD’s Dolphin hatchback, sales of battery-only and plug-in hybrids accounted for more a third of the market during the first two months of the year.

Passenger car sales continue to be driven by battery and plug-in vehicles “as new, ​cheaper models are coming into the market ​and country policies are encouraging EV ‌adoption,” Citi analysts led by Harald Hendrikse said in a note.

While overall deliveries were roughly stable, the start of the war in Iran that’s engulfing the Middle East may deal a setback to an expected recovery for vehicle demand in Europe, according to Bloomberg Intelligence analyst Gillian Davis. 

“War-driven economic uncertainty and faster inflation, potentially prompting rate hikes, could knock consumer confidence, deterring spending on big-ticket items like new cars,” Davis said in a note.

Bloomberg Intelligence offered a new outlook in the event of a prolonged conflict, saying European sales for 2026 risked falling 4 per cent, compared with a pre-war prediction for a 2 per cent gain.

Growing demand for EVs and plug-in hybrids is benefiting Chinese carmarkers including BYD and Zhejiang Leapmotor Technology, which took market share in a dozen European markets, Jefferies analysts led by Philippe Houchois said. European Union import tariffs on Chinese-made EVs have only marginally slowed the uptake.

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BYD and SAIC Motor which owns the MG brand, both outsold Tesla during February after sales growth of 162 per cent and 12 per cent, respectively. The two manufacturers’ combined sales totalled 40,314 cars, or 4 per cent of the market.

Europe’s carmakers are fighting back with a growing offering of competitive EVs. Volkswagen’s namesake brand and its Skoda and Cupra nameplates are rolling out new EVs for around US$29,041 this year. More than half of the 22 models Renault will launch in Europe by 2030 will be electric. BLOOMBERG