European consumers are buying electric cars faster than ever before, encouraged by government subsidies and the availability for the first time of models built by their favorite brands.
The boom is so strong that last year Europe overtook China as the largest market for electric vehicles. Its share of new electric car sales nearly doubled to 43%, while China and the US lost market share.
But the boom in Europe is heavily dependent on government incentives issued during the pandemic, and analysts warn that momentum could be reversed if and when support is withdrawn. Most government subsidies from the government are limited and will expire at the end of this year.
“The market is extremely sensitive to discounts on government and companies,” said Bernstein Research car analyst Arndt Ellinghorst. “Once subsidies are taken away, EV sales will collapse by 30-40% for at least one or two quarters.”
Without the subsidies, motor vehicle aircraft are still more expensive than equivalent internal combustion motor vehicles. That is unlikely to change later this decade, analysts say, as battery prices fall as a result of new technology, greater scope and competition.