Boom in e-cars: EU car market continues to grow - Chinese to follow

Tesla Leads in Germany’s Electric Vehicle Subsidy Program Amid Rapid Market Growth The German government has allocated over 50 million euros in subsidies for electric vehicles (EVs) since the start of its new support program in May 2026. According to data released by the Federal Environment Ministry, Tesla has emerged as the most popular brand among recipients, with 2,086 vehicles approved for funding by June 30. This figure surpasses those of other major automakers such as Skoda and Renault, which received 1,197 and 784 approvals respectively. Volkswagen, however, leads overall with 2,720 funded vehicles across its brands, including Audi, Seat, Porsche, Skoda, and Volkswagen itself. Stellantis follows closely behind with 2,278 vehicles, including models from Citroën, DS, Fiat, Jeep, Opel, and Peugeot. The subsidy program, part of the coalition government's broader strategy to promote sustainable mobility, offers financial incentives ranging up to 6,000 euros per vehicle, depending on income level and family size. The initiative aims to support the purchase and leasing of EVs, certain plug-in hybrids, and vehicles equipped with range extenders. Eligibility requires a registration date after January 1, 2026. With a total budget of three billion euros, the program is projected to cover up to 800,000 vehicles. As of June 30, more than 53.9 million euros had been disbursed, representing a snapshot of early demand. Despite the high number of applications, the ministry cautioned against drawing definitive conclusions about long-term trends due to the relatively short duration of the program and the rapid introduction of new models. The market dynamics have led to frequent changes in consumer preferences, making it difficult to assess how the subsidies will distribute over time. The program is designed to encourage the transition away from conventional combustion engines, with battery-electric vehicles (BEVs) accounting for nearly a quarter of all new car registrations in the first half of 2026. According to the Federal Motor Transport Office (KBA), 368,066 BEVs were registered during this period, marking a 48 percent increase compared to the previous year. This surge reflects a broader shift toward electrification, with alternative fuel vehicles, encompassing BEVs, plug-in hybrids, hydrogen-powered cars, and gas-powered vehicles, representing 65.1 percent of all new car registrations. This percentage rose significantly from 56.6 percent in the same period last year. Conventional gasoline and diesel vehicles continue to decline in popularity. In the first half of 2026, internal combustion engine vehicles saw a drop of 18.2 percent for gasoline models and 8.6 percent for diesel models. The trend persisted into June, with gasoline vehicles registering a 16.8 percent decrease and diesel vehicles losing 5.1 percent compared to the previous month. Among EV manufacturers, Tesla recorded a dramatic 224.6 percent increase in BEV registrations, reaching 28,857 units. This growth was driven by strong demand for the Model Y and other models, despite challenges in securing local battery production. Volkswagen remained the top-selling EV brand with 49,495 registrations, although it posted a slight 5.6 percent decline. Skoda followed with a 63.9 percent rise, while BMW and Mercedes also saw substantial increases of 37 percent and 81 percent, respectively. Smaller brands demonstrated even stronger performance. Peugeot increased its BEV registrations by 279.7 percent, reaching 6,675 units, while BYD saw a 128.5 percent jump to 10,381 units. Renault also grew by 95.3 percent, adding 10,933 units. Meanwhile, some Chinese brands struggled, with NIO registering just 15 units, a 87.6 percent drop, and GWM experiencing a 98.7 percent decline. The growing share of EVs has contributed to a reduction in average CO₂ emissions. The KBA reported a 10.3 percent decrease in emissions to 98.4 grams per kilometer, with a further drop to 92.6 grams per kilometer in June. Over a third of all newly registered vehicles emitted less than 50 grams per kilometer, indicating a clear move toward lower-emission transportation. SUVs continued to dominate the market, accounting for 35.5 percent of all sales, far ahead of compact cars (13.6 percent) and small cars (12.9 percent). The electrification trend spans all vehicle classes, from the MINI to the Mercedes EQS. Despite this broad adoption, there is no indication of a shift toward smaller vehicles. Premium brands such as BMW and Mercedes lead in the adoption of alternative powertrains. BMW achieved an 84.5 percent alternative propulsion rate, while Mercedes reached 81.3 percent. Porsche, known for its commitment to electrification, came close with 71.1 percent. Among all-electric and hybrid vehicles, Porsche led with 52.2 percent of its fleet using battery-electric power, followed by Audi at 43.3 percent. Opel also showed remarkable progress, increasing its alternative propulsion share by 100.3 percent. Meanwhile, Tesla continues to expand its presence in Germany through both sales and manufacturing. The company plans to launch battery cell production at its Grünheide plant in Germany, aiming for an annual capacity of up to 18 gigawatt-hours. This represents roughly one-fifth of the initial ambitions outlined by CEO Elon Musk, who had previously scaled back his European production goals following the U.S. Inflation Reduction Act. Tesla’s investment in the facility includes additional funding exceeding 200 million euros, bringing total investments for cell and battery production to over one billion euros. The project marks the first instance of an EV manufacturer producing batteries within Europe, signaling a strategic shift in the industry.