Europe's electric vehicle (EV) market is thriving in 2025, marking a robust recovery. From January to April, over 2.2 million electrified vehicles were registered across the European Union, Switzerland, Norway and Iceland, according to the European Automobile Manufacturers' Association.

This figure, encompassing battery-electric vehicles (BEVs), hybrid-electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs), reflects a 20% surge compared to the same period in 2024. BEV registrations alone soared by 26%, signaling strong momentum in the shift to zero-emission driving.

The United Kingdom mirrored this trend, with BEV, HEV and PHEV registrations climbing 22.8% to 486,561 units from January to April. Pure electric models led the charge, with sales surging by over a third.

This rebound offers relief to Europe's automotive industry, which is grappling with rising production costs, fierce competition from Chinese EV manufacturers and stringent EU carbon emissions regulations. The sector now faces new challenges, including potential tariffs on cars exported to the United States, as threatened by US President Donald Trump.

In 2024, EV registrations plummeted across Europe, particularly in major markets like Germany and France, though hybrids bucked the trend with nearly 30% year-on-year growth. The downturn stemmed from multiple factors.

Germany, Europe's largest car market, abruptly ended EV subsidies in 2023 due to budget constraints, betting that declining vehicle prices would sustain demand. However, the loss of incentives — ranging from €3,375 ($3,854) to €9,000 based on vehicle cost — deterred price-sensitive consumers, leading to a 27.4% drop in BEV registrations.

France faced a broader auto market downturn, driven by economic uncertainty and stricter EV subsidy eligibility rules. This not only impacted EV sales but also led to sharp declines in petrol and diesel vehicle deliveries, compounding the industry's problems.

The recovery was anticipated to come from growing consumer enthusiasm for EVs, fueled by advances in battery range and expanded charging infrastructure. While these factors contributed, auto analysts attribute the primary driver to a January 1 EU mandate requiring automakers to cut fleet-wide CO2 emissions by 15% from 2021 levels. 

This regulation spurred a surge in corporate sales, particularly in Germany, allowing carmakers to avoid hefty EU fines.

"To avoid fines for excessive emissions [on sales of petrol and diesel models], vehicle manufacturers were told to increase sales of EVs, through price discounts or more cost-effective models," Sandra Wappelhorst, research lead at the Berlin-based International Council on Clean Transportation Europe, told DW.

In recent months, German automakers like Volkswagen as well as Stellantis have rolled out attractive leasing deals and launched new EV models, incentivizing companies to accelerate fleet electrification. Corporate buyers, who account for roughly two-thirds of car sales in Germany compared to just 20% in France, have been a key force behind the rebound.

Constantin Gall, an analyst at the consulting firm EY, highlighted that the price gap between internal combustion engine vehicles and EVs has "significantly narrowed." He added that automakers are "offering highly competitive financing and leasing terms for electric vehicles," further boosting corporate adoption across Europe.

With automakers having to bear the cost of not meeting the emissions targets, they lobbied hard in Brussels to have them cut. Last month, the European Council, the EU's political authority, approved the easing of the annual targets for the next three years, to reduce potential fines.

Wappelhorst is disappointed at the rollback, arguing that regulatory pressure has proven effective in helping EV adoption. She noted that the current rebound in EV registrations mirrors a similar emissions deadline during the COVID-19 pandemic that also boosted sales. She cautioned that the three-year relief now "risks slowing the EV transition just as momentum builds."

The EV transition remains patchy across Europe, with Norway and Denmark leading the way and other Western European countries close behind. Registrations in Bulgaria, Croatia, Poland and Slovakia, however, remain below 5%.

"Even in these lower-share countries, new BEV registrations have increased significantly," Wappelhorst said, noting how Poland recently saw an over 40% growth rate. "This pattern underscores the positive momentum across European markets, including those where the transition is in its early stages."

Public enthusiasm for EVs, meanwhile, isn't growing as fast as policymakers would like. An AlixPartners survey last year found interest in electric vehicles stagnant at 43% compared to 2021, with hybrids favored as a practical alternative due to lower charging concerns.

Similarly, a Bloomberg Intelligence survey around the same time revealed that only 18% of European car buyers preferred BEVs, while 46% supported hybrids.

Charging infrastructure also remains a critical barrier. Although Europe surpassed 1 million public charging points in 2025, GridX energy research projects a need for 8.8 million by 2030. To meet this target, installations must accelerate to nearly 5,000 new chargers per week, GridX said.

For the rest of 2025, Tesla’s fortunes will remain in focus after its sales plummeted 39% from January to April across Europe. The decline stems partly from a backlash against CEO Elon Musk’s controversial support for far-right groups, notably Germany’s Alternative for Germany, ahead of the federal election in February. His backing sparked accusations of political interference and led to vandalism of Tesla properties and vehicles.

Musk's deepening political involvement, including his role as a key adviser to Trump, has further eroded Tesla's brand appeal, with some owners distancing themselves from the world's richest man. His decision to step back from political duties last week leaves uncertainty about whether Tesla can reverse its sales slide.

While Tesla stumbles, automakers from Chinaare gaining ground, thanks to heavy state subsidies that are undercutting European and Japanese rivals. Despite EU tariffs aimed at curbing the influx of low-cost Chinese EVs, China's market share in Europe surpassed 5% for the first time in the first quarter of 2025, according to Bloomberg. JATO Dynamics reported a 546% year-on-year surge in Chinese plug-in hybrid registrations.

After aggressive marketing, Chinese brand BYD overtook Tesla in European sales for the first time in April, registering 7,231 vehicles compared to Tesla's 7,165, a 169% increase from April 2024, according to JATO Dynamics. This shift underscores the fast-changing dynamics of the European auto market, now that China has caught up on the technology front.

Edited by: Uwe Hessler