Renewable Energy

Europe Is Subsidizing Its Way Into Electric Vehicle Leadership

Electric car
Credit: iStock photo

As Europe looks to lead the world in electric vehicle (EV) uptake, many governments are incentivizing the switch from traditionally-fueled cars to electric alternatives, hoping to end the sale of petrol and diesel vehicles and get on the path to net-zero carbon emissions over the next decade. As major automotive manufacturers catch up with niche EV brands such as Tesla, Europe is ready to build up its EV market through incentives such as subsidies, free electric charging options, tax breaks, and a wide variety of EV options for consumers. Several European countries are now leading the way for EV promotion, racing to get ahead of rich Asian nations and North American competitors also looking to make the shift. 

In the UK, energy regulator Ofgem is planning to make EV uptake more attractive to consumers by making it possible for drivers to sell electricity stored in their car batteries back to the power grid when demand is at peak levels.

Ofgem is optimistic that if enough new EV drivers take part in the scheme, they could make money by selling energy and allow the U.K. to avoid developing new power plants by providing the same amount of energy generation of up to 10 nuclear plants.

At present, there are over 535,000 EVs, including hybrids, on the roads across the U.K. However, this figure is expected to soar to 14 million by 2030. This will be largely in response to the planned banning of the sale of new petrol and diesel vehicles in the U.K. from 2030. The new scheme expects to make use of smart charging capabilities to track energy in EV batteries and demand levels on the grid. 

Graeme Cooper, the National Grid head explains, “Smart charging essentially allows your car to ‘talk’ to the grid, using data to assess when is the best time for your car to charge,” “It’s a cheaper, more energy-efficient and sustainable way of charging electric vehicles.”

Oil majors are already getting ahead of the EV curve with Shell planning to install 50,000 on-street EV charge points by 2025. Shell is working closely with local authorities, offering to pay up-front costs for charging station installation, with the state’s Office for Zero-Emission Vehicles footing 75 percent of the bill through grant schemes. 

Meanwhile, Germany has announced it will be extending its existing EV subsidies through 2025, originally expected to end in 2021, in a push to create greater EV uptake across the country. In 2020, Germany doubled incentives for EV, offering a €3,000 bonus for fully electric vehicles and €2,250 towards hybrids, as well as a 10-year tax exemption and lower VAT rates. Some European manufacturers are offering an additional €3,000 stipend to buyers.

In Germany, Europe’s largest EV market, EV made up around 1.8 percent of all new passenger car registrations in 2019, a figure that is rising year on year. Smart, Seat, Mini and BMW were among some of the EV manufacturers to gain significantly in the German market, as we saw an increase of 37 percent in EV uptake in May 2021 compared to the same month in 2020. Skoda, Kia, VW, Hyundai, Opel and Toyota all also experienced an increase in their EV sales, while Honda, Jaguar, Mercedes and Mitsubishi EV sales were down on 2020.

France has also joined the list of European countries to provide EV incentives, offering national producers, such as Renault, a support package to encourage greater EV production. The French government is also offering consumers CO2-related tax exemptions, subsidies of up to €7,000 and a scrappage scheme for old traditionally-fueled cars.

Likewise, Spain has reduced taxes on EVs in major cities, also offering subsidies on EV purchases of between €4,000-5,000 when scrapping old vehicles. And the Italian government is providing bonuses for lower carbon-emitting cars, while penalizing high carbon-emitting vehicles.

Many governments across Western Europe have decided to offer some kind of incentive for EV consumers as they push to decarbonize their economies and promote the shift from traditionally-fueled vehicles to electric alternatives. This has made several car manufacturers eager to produce electric models as well as their existing vehicles as the European market is set to grow, having already overtaken China as the leading EV market in 2021 with 43.3 percent of the market share compared to 41 percent. 

The European Automobile Manufacturers Association (ACEA) reported that nearly one in six-passenger cars registered in the European Union in the fourth quarter of 2020 was an electrically-chargeable vehicle, 16.5 percent, with 1.3 million units registered in Europe in 2020. 

The variety of EV models available in Europe is also growing significantly, with consumers not just limited to Tesla and other expensive, early models any longer. The number of EV models available in 2021 is expected to be 214, up from just 98 in 2019.

Stimulus packages and tax breaks on EV purchases have helped Europe climb to become the world leader in the electric vehicle boom. As governments plan to ban the sale of petrol and diesel cars, this trend is set to continue, but will the majority of consumers jump on the EV train while these incentives are still in place or hold out until the end when there is little alternative?

By Felicity Bradstock for

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. is the leading online energy news site. We have extensive coverage of all energy sectors from crude oil and natural gas to solar energy and environmental issues. Our analysis covers energy technology, finance & trading, geopolitics and sector news. We also have detailed oil prices.

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