Europe Emerges as the Largest Electric Vehicle Market, Surpassing China

Europe's Electric Vehicle Sales Reach 881,000 Units from January to October, Surpassing China
Expected to Lead China on Annual Basis as Well

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Europe has surpassed China to become the world's largest electric vehicle (EV) market. This is attributed to the European Union (EU) governments providing subsidies for EV purchases as a measure to stimulate domestic demand amid the COVID-19 pandemic, as well as the strict emissions regulations set to take effect next year driving EV sales.

On the 8th, Nihon Keizai Shimbun reported, citing research firm Marklines, that from January to October this year, EV sales in Europe reached 881,000 units, surpassing China's 789,000 units. Although new car sales in Europe decreased by 27% compared to the same period last year, EV sales more than doubled. If the current trend continues, annual sales in Europe are expected to overtake those in China.

The rise of Europe as the largest EV market is largely attributed to governments targeting environmental investments as a means of economic stimulus and providing subsidies for EV purchases. France announced a policy in May to support up to 7,000 euros for EV purchases. When combined with other subsidies, buyers can receive up to 12,000 euros (approximately 15.75 million KRW). Following the French government's announcement, EV sales from June to October increased 3.2 times compared to the same period last year. Germany also introduced a subsidy policy offering up to 9,000 euros for EV purchases.

The company with the highest year-on-year sales increase in Europe was Germany's Volkswagen. Volkswagen sold 183,000 units, 3.9 times more than the same period last year. French PSA Group (Peugeot Citro?n) sold 83,000 EVs. PSA plans to replace all models sold by 2025 with electric vehicles.

Strict environmental regulations by the European Union (EU), involving major European countries, also contributed to the strong EV sales. The EU introduced a policy to reduce carbon dioxide emissions from all vehicles sold within the region from 130g per km to 95g per km, a reduction of about 30%. Automakers that exceed this limit face a fine of 95 euros per gram over the limit. Therefore, starting next year, most automakers including Toyota and Nissan will have to pay hefty fines if they do not reduce emissions.

Not only Europe but also the United States, Japan, and others are focusing on transitioning to eco-friendly energy. The EU announced plans to invest $558 billion in green hydrogen by 2050, while Canada plans to supply 27% of its energy demand with hydrogen by 2050. Australia has declared ambitions to become Asia's largest hydrogen exporter by 2030. U.S. President-elect Joe Biden has declared an investment of $5 trillion in green and renewable energy over the next decade.