Despite the crisis: e-car market share could reach 24 percent

The German automotive industry is in crisis this year. Sales have fallen, especially for e-cars, and the switch to e-mobility is expensive. Last week, manufacturers and trade associations held a car summit with Federal Minister Robert Habeck to find solutions. A new analysis shows that European car manufacturers could meet their_{CO2 fleet targets} next year, as sales of e-cars are expected to increase rapidly. E-cars are expected to reach a market share of 20-24 percent in 2025, according to modeling by Transport & Environment (T&E) based on sales in the first half of 2024 and sales forecasts.

The German government's ambitious goal is to have seven to ten million electric cars on the roads in Germany by 2030. However, it is unclear exactly how this is to be achieved. Across Europe, sales on the car market have declined, and in Germany in particular, sales of e-cars, which were still flourishing last year, have slumped in 2024. Added to this is the rapid switch from combustion to electric cars in China, making this market increasingly difficult for European manufacturers as Chinese companies dominate the electric car market.

Fleet targets to be postponed

The European Union's_{CO2 fleet targets} define requirements for car manufacturers regarding the emission values of their new cars and are considered the most important guideline for the decarbonization of car traffic.

These stipulate that

• By 2030, the majority of cars on the roads will be electric, and
• The goal of zero emissions from cars (also known as the extremely hotly debated "combustion engine phase-out") is to be achieved by 2035

Some manufacturers are calling on the EU to trigger a crisis clause to postpone their_{CO2 targets} by two years. They cite concerns about the sluggish sales of battery electric vehicles (BEVs), including Hans Dieter Pötsch, who heads the Volkswagen Supervisory Board as the representative of the main shareholder families Porsche/Piëch. They are threatened with fines in the billions if they fail to comply.

In contrast, Carlos Tavares, who heads the Stellantis Group, Volkswagen's largest competitor, was critical and called the idea "surreal": everyone had had enough time to adjust to the CO₂ targets and act accordingly, said Tavares.

It is still unclear whether the fleet targets will actually be postponed due to pressure from the car lobby. Federal Economics Minister Habeck said after the car summit that the limit values should actually be revised in 2026. He now wants to work at EU level to ensure that this happens next year.

Electric cars make an important contribution to fleet targets

However, T&E's central scenario predicts that e-cars will contribute on average 60 percent of the_{CO2 reduction} that car manufacturers will have to achieve next year for the EU fleet limits. These will be achieved in part by seven new all-electric models under €25,000 coming onto the market in 2024 and 2025.

Sebastian Bock, Managing Director of T&E Germany, explained in a press release: "2025 will be a good year for anyone in Europe who would like to drive an e-car. According to current forecasts, e-cars will account for almost a quarter of new cars sold thanks to a flood of new, affordable models. The fact that some manufacturers are relying on hybrids to achieve the EU targets is a short-sighted strategy - for the climate and to compete with Chinese e-cars. Hybrids usually emit significantly more_CO2 in reality than on paper."

Here are the most important results of the analysis

While e-cars will make the largest contribution, it is expected that

• Stellantis and the Volkswagen Group also rely on hybrids (HEVs) to achieve 33 and 30 percent of the CO2 reduction they still need to meet the EU targets. This is the central scenario of T&E's modeling, which is based on the sales forecasts of the market research company GlobalData.
• According to the study, sales of hybrid vehicles are also likely to close a significant part of the emissions gap at Mercedes-Benz (17 percent) and Renault (15 percent).
• The central scenario shows that, in addition to its all-electric models, BMW will rely on plug-in hybrids to achieve 18 percent of the emissions reduction required to meet the EU target for 2025.
• If manufacturers rely more heavily on hybrid sales to meet the targets, the overall market share of e-cars would be 20 percent next year. This is the conclusion reached by T&E in the scenario that assumes a higher HEV share.
• Volvo Cars already meets the requirements in all scenarios thanks to its high BEV sales.

• In the central scenario, a BEV share of 24 percent is forecast.

If car manufacturers still have difficulties, they can join forces with other manufacturers (so-called pooling) to further reduce their average emissions, according to the analysis.

Promotion of electrification

"Now is the time for the EU to promote the spread of electric cars by setting targets for the electrification of company fleets. This would increase the demand for e-cars enormously and secure a safe sales market for Volkswagen in particular, with a commercial share of 70 percent of new registrations for its own e-cars," continued Bock, who also called for measures to promote social leasing and charging station infrastructure.