EU, Europe focus on increasing EV uptake to phase out ICE sales by 2035

While the new US administration has pledged to eliminate the country's electric vehicle mandate in favor of promoting true consumer choice, the UK and the EU are focused on increasing EV uptake to meet the common goal of banning the sale of new internal combustion engine vehicles by 2035 at the latest.

"In the EU and UK, automakers are facing a step-up in the stringency of CO2 standards and a ZEV mandate, respectively, in 2025 — although auto industry associations have suggested that the targets will be challenging to meet on an industrywide basis," S&P Global Commodity Insights said in the Mobility and Energy Future's Pulse of Change: BEV and PHEV sales update released in January.

In the December Lithium and Cobalt Commodity Briefing Service report, Commodity Insights forecast BEV sales in the EU to be around 2.29 million units in 2025, rising to 6.92 million units in 2030 and 10.01 million units in 2035.

In the UK, BEV sales were forecast to be around 530,000 units in 2025, 1.49 million units in 2030 and 2.1 million units in 2035.

German Chancellor Olaf Scholz told the World Economic Forum in Davos Jan. 21 that "e-mobility is the future," and anyone who suggested otherwise harmed the industry.

However, he added it was also harmful when European automakers had to pay fines to Brussels instead of being able to invest the money in clean energy and clean mobility.

"This is not helpful to anyone, at least the climate. We need pragmatic solutions, not ideological ones," Scholz told the forum, adding that European Commission President Ursula von der Leyen had taken up his proposal to introduce a Europe-wide harmonized incentive to promote EV sales.

"Our aspiration for Europe has to be we make ourselves better and its crucial that Germany, as largest economy in the EU, massively invests in its future," he said.

Scholz's Social Democratic Party is proposing a temporary tax deduction to encourage the purchase of EVs manufactured in Germany.

Banning ICE sales

Germany has set a goal of 15 million EVs to be deployed on German roads by 2030, with the entire EU aiming to ban the sale of new internal combustion engine vehicles by 2035.

In December, the EC said it would be starting a strategic dialogue on the future of Europe's automotive industry on Jan. 30 to bring together key stakeholders from across the industry to swiftly propose and implement measures.

The UK aims for 80% of new cars and 70% of new vans sold in the UK to be zero emission by 2030, rising to 100% by 2035.

In late 2024, the UK government launched a consultation to reinstate a 2030 phaseout date for new ICE vehicles and shape the transition to zero-emission vehicles.

Quentin Willson, founder FairCharge and EVUK advisory board member, told Commodity Insights that Germany and the EU's decision to return to EV subsidies and Scholz's statement sent a strong signal from Europe to global investors.

"The UK is now perfectly placed to attract green capital with its successful EV policies and market dominance. The government must make sure they harness this tremendous growth opportunity," he said.

Chris Heron, secretary general of Europe's electric vehicle lobby AVERE, said Europe's top 2025 priority had to be smarter incentives to encourage EV sales.

"We won't have a problem with automaker fines if we get enough cars sold first," he said.

"Last year's entire market was torpedoed by Germany's abrupt subsidy removal. We welcome the EU's evaluation of how it can stimulate demand in a smart way, but Member States will continue to bear the most responsibility for supporting their domestic markets," Heron said.

"All Member States have agreed to the EU's 2035 target, but it's frustrating that not every government is prioritizing electric car sales ahead of a critical year."

"We know there are smart and fiscally efficient ways for governments to boost sales. We hope to see an EU-wide demand push in the next six months," he added.

2024 BEV sales mixed

In 2024, the UK became the largest battery electric vehicle market in wider Europe, selling a record 381,970 units, up 21.4% year over year and with a record 19.6% market share, according to the Society of Motor Manufacturers and Traders.

While the market share was up from 16.5% in 2023, it remained below the mandated 22%, the SMMT said.

Europe's largest car market Germany saw the volume of BEVs sold fall 27% year over year in 2024 to 380,600 units, according to auto industry association VDA.

Dan Caesar, CEO of Electric Vehicles UK told Commodity Insights that the UK's overtaking of Germany in EV sales in 2024 was "emblematic of the opportunities that one country has, against the issues that face the Eurozone."

"One has the potential to be agile and benefit from the switch to battery EVs, while the other has a complex bureaucratic and automotive landscape to navigate. 2025 should see the UK's upward trajectory continue," he said.

BEV sales in the rest of the EU's top four passenger vehicle markets were mixed in 2024, with France's down 2.6% year over year to 290,614 BEVs and Italy's falling 1% to 65,620 units, although Spain's jumped 11.2% to 57,374 BEVs, according to data from the European Automobile Manufacturers Association.

However, Italy's and Spain's BEV sales were far below those seen in the Netherlands and Belgium, where 132,422 and 127,703 BEVs were sold in 2024, respectively, up 16% and 36.9% from 2023.

BEV sales in Scandinavia continued to be strong, with Norway's BEV sales up 9.4% year over year to 114,405 units in 2024 and Denmark's rising 42.2% to 89,199 units, although Sweden's sales dropped 15.9% to 94,366 BEVs.