While the global adoption of electric vehicles (EVs) continues to accelerate, Europe is entering a phase of subsidy reductions that could challenge the sector’s growth. Following Germany, major European nations like France and Spain are now planning to cut back on their EV incentives, raising concerns about the market’s future.
As part of its 2025 national budget, France aims to significantly reduce subsidies for electric vehicles. Currently, French consumers can receive €4,000 to €7,000 for EVs priced below €47,500. However, starting next year, this range will drop to €2,000 to €4,000.
France’s innovative electric vehicle leasing program, which allowed low-income households to rent small EVs for €100 per month or larger family EVs for €150, is also being scaled down. The program’s 2024 budget of €650 million will be slashed to €300 million, despite overwhelming demand.
Spain is evaluating cuts to its €1.55 billion EV incentive program. Currently, customers can receive up to €7,000 for electric cars and €9,000 for commercial EVs, with additional support for motorcycles and scooters. Although the new system aims to speed up subsidy payments, the total budget and specifics remain unclear.
Germany experienced a sharp decline in EV sales after its subsidies were reduced in December 2023. Sales fell by 16% in June, 37% in July, and a staggering 69% in August, compared to the same period the previous year. This trend underscores the critical role of incentives in sustaining the EV market.
According to Rho Motion, battery electric vehicles remain 75% more expensive than their internal combustion counterparts. Tax breaks and subsidies are crucial in bridging this gap and driving adoption. Reducing these incentives could significantly hinder Europe’s EV market growth and delay its green transportation goals.
To ensure the sustainability of the EV sector, governments must develop long-term strategies that balance environmental objectives with market realities.