Europe’s EV dilemma: How can ambition meet reality?

The European Union has set bold targets for decarbonizing the automotive sector, but the road to full electrification is proving more complicated than anticipated. At the recent Drive Forward event in Helmond, Holger Hausmann of S&P Global laid out a sobering picture of where Europe stands in its transition to battery electric vehicles (BEVs), and what still needs to happen to bridge the widening gap between ambition and reality.

“Regulation, OEM strategies, and consumer adoption are the three key pillars we need to align,” Hausmann began. He pointed to the Fit for 55 package, which defines the EU’s climate targets, as a crucial driver. Without it, he said, “we wouldn’t have seen any action at all.” But even with regulations in place, the transition is lagging.

Regional divides

S&P Global data shows clear regional divides. Scandinavia is leading the charge, with BEV market shares reaching as high as 95% in Norway. Western European countries like Benelux, France, and the UK hover around 20%, while Southern and Eastern Europe - including major markets like Italy and Spain - are stuck below 10%, sometimes even under 5%. The decline in Germany is also worrying.

“This imbalance makes it impossible to achieve EU-wide targets unless the frontrunners vastly overcompensate for the laggards,” Hausmann warned.

DAF CEO: 'Decarbonization is a team sport, not a solo race'

Harald Seidel urges European collaboration to overcome infrastructure, cost, and clarity barriers in the shift to zero-emission trucking.

The economics of electrification further complicates the situation. Despite progress, electric vehicles remain expensive, particularly at the lower end of the market. “Electrification has run from the top down,” he explained. “We don’t see enough affordable models entering the market, and those that do often come with compromises on range, equipment, or size.”

OEMs (original equipment manufacturers) face tough choices. While most had committed to phasing out internal combustion engines after Fit for 55, many are now rethinking their strategies. “Profitability is a huge challenge,” said Hausmann. “That’s why we’re seeing renewed interest in plug-in hybrids and even range extenders, technologies that offer a bridge to full electrification without the same cost burdens.”

Behind on targets

According to S&P Global’s revised forecasts, Europe is already behind on its 2025 targets, and 2030 looks equally problematic. “The EU Commission has started to react,” Hausmann noted, referencing the European Action Plan to address the shortcomings. “We believe the targets will ultimately have to be amended; delayed, and possibly made less strict.”

This doesn’t mean the decarbonization goal is off the table. “Battery electric vehicles remain the number-one technology for reducing emissions in the passenger car segment,” Hausmann stressed. “But the pace has to be realistic, and the consumer needs to be at the center of this transition.”

"Automation, electrification, digitalization: all interconnected"

Zeljko Jeftic, Director Autonomous Electric Transport (AET) at Einride, shares this vision at this year's Drive Forward event.

A major competitive threat also looms from Chinese manufacturers, who are aggressively targeting the European market with low-cost, high-tech EVs. S&P Global estimates they could reach a 10% market share in Europe soon. “Tariffs may slow them slightly, but they won’t stop them,” Hausmann warned. “They’re evolving fast and adapting to local demands.”

Asked whether smaller, more affordable EVs like basic city cars should be part of Europe’s future strategy, Hausmann responded pragmatically: “Why not? But if you can’t make a profit on it, it’s a tough sell for traditional OEMs. Some will try, just to stay competitive, while others might simply leave that space to the Chinese.”

What’s next?

As for what kind of regulation to expect next, Hausmann foresees continued reliance on CO₂ targets, albeit with more flexibility. “The concept of technological openness will probably allow more hybrid or extended-range vehicles. Instead of aiming for 100% BEVs by 2035, we might be looking at 85%.”

In short, the European automotive industry faces a delicate balancing act. Regulation must be firm but adaptable. OEMs must innovate while remaining viable. And most critically, consumers must be given affordable, desirable options if the continent hopes to hit its climate goals. As Hausmann concluded: “We still need to electrify, but we also need to face the reality of where we are, and adjust accordingly.”