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The EU new-car market is experiencing a slight contraction, with overall registrations decreasing by about 1% in the first half of 2025 compared to the previous year. However, this contraction is counterbalanced by a continued strong growth in electrified vehicles (EVs and hybrids).
In February, the European new car market saw a decline, influenced by high prices and geopolitical tensions. Despite this, electrified models dominated the market, accounting for a 58.4% market share and a 17.1% growth in registrations.
Battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) were the main drivers of this growth. BEV registrations surged by around 15% in February alone, and by 34% in the first half of 2025 compared to the previous year. PHEV sales grew even faster in June 2025, by 40% year-on-year.
On the other hand, petrol and diesel registrations continue to decline, correlating with the rise of electrified vehicles and the ongoing EU push to reduce internal combustion engine sales. In February, petrol registrations fell 22.4% year on year, with a market share of 28.6%. Diesel registrations dropped 28.8%, accounting for a 9.4% share of total figures.
Hybrid vehicles led the new-car market in February, holding a 35.6% share of deliveries, up from 28.9% the previous year. EVs accounted for 22.8% of all models delivered in February, up from 19.3% the previous year.
The EU's action plan to relax CO2 emissions regulations does not seem to be reversing the growth of EV sales or impacting petrol/diesel sales explicitly. Instead, EV sales continue to gain momentum, suggesting that current or near-term relaxations in CO2 rules have not weakened the shift toward electrification by mid-2025.
In summary, the EU new car market is facing modest overall decline but remains robust in electrified vehicle growth, with BEVs and PHEVs capturing an increasing share, while petrol and diesel registrations drop. The policy environment, including supportive measures and infrastructure investments, continues to favor electrification despite market pressures.
[1] Source: ACEA Quarterly Report Q1 2025 [2] Source: ACEA Monthly Report February 2025 [3] Source: European Commission CO2 Monitoring Report Q1 2025 [4] Source: European Commission CO2 Monitoring Report February 2025 [5] Source: European Automobile Manufacturers Association (EAMA) Press Release, May 2025
- The growth in electrified vehicles, particularly battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), is contributing to the finance sector as investments in the automotive industry for electric-vehicle manufacturing rise.
- The lifestyle changes brought about by the increasing adoption of electric vehicles are visible across transportation, as more people opt for eco-friendly and technologically advanced cars.
- Despite the contraction in the overall new-car market in the EU, the industry is witnessing a significant shift towards electric vehicles, which is anticipated to have far-reaching implications for finance, transportation, and lifestyle.
