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EU Electric Car Sales Dip Amid Subsidy Cuts – Germany Leading

Analyst Team trader
Updated 20 Jun 2024

In May, the European Union (EU) witnessed a decline in sales of new battery-electric vehicles, falling 12% compared to the same month last year. This downturn is especially pronounced in Germany, where sales plummeted by 30%. This drop is significant given Germany's status as the largest EV market within the EU.

Europe's auto industry body attributes this slackening demand to the cessation of subsidies for EV purchases, an initiative that was part of Germany's 2024 budget deal finalized in December. Consequently, the year-to-date figures show a 16% drop in EV sales.

Overall, new car sales in the EU also experienced a 3% reduction in May from the previous year, with the broader region—including the EU, Britain, and the EFTA (European Free Trade Association)—seeing a 2.6% dip. This general decline in new car sales mirrors the specific downturn seen within the EV sector.

In an effort to protect domestic automakers, the European Commission has taken a somewhat protectionist measure by announcing provisional duties of up to 38.1% on Chinese-made EVs, to be imposed starting July. This is anticipated to raise the cost of imports, evidenced by Tesla's expected price increase for its China-made Model 3 vehicles in the EU, following a 34.2% decline in its regional sales in May.

Despite the current market challenges, Transport & Environment, a European campaign group, forecasts a resurgence in EV sales starting from 2025. This prediction is rooted in the next set of EU car emission targets slated to come into effect, which is expected to stimulate the electric vehicle sector.

In May, electrified vehicles—including both fully electric models and hybrids—made up 48.9% of all new passenger car registrations in the EU. However, the market share for fully electric cars dipped to 12.5%, while that for hybrids increased to 29.9% when contrasted with the same month in 2023.

Amidst these trends, Volkswagen recorded a slight rise in EU registrations by 1.6% in May. Meanwhile, competitors Stellantis and Renault observed decreases of 6.9% and 5.4% respectively. In contrast, Toyota experienced a robust increase of 13% in sales during the same period.

The EU electric car market is undergoing a period of adjustment, influenced by policy changes and economic factors. While the short-term outlook reflects a slowdown, driven by the phasing out of subsidies in key markets like Germany, there are expectations of a market recovery in line with tighter emission regulations and a continued pivot towards sustainable mobility solutions.

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.