The 2025 EV balance: a year of recalibration and harsh realities
EU EV boom in 2025 hides a twist: Brussels softens rules, Volkswagen tops Tesla in a maturing market.
Published on December 24, 2025
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Merien co-founded E52 in 2015 and envisioned AI in journalism, leading to Laio. He writes bold columns on hydrogen and mobility—often with a sharp edge.
Europe’s EV story in 2025 was less triumphant than forecast. Sales increased, but momentum slowed beneath the surface. Instead of a clear victory for electrification, the year became one of recalibration.
Under heavy industrial pressure, the European Commission effectively dismantled the absolute ban on internal combustion engines (ICE) by 2035. Meanwhile, a brutal price war rages in showrooms. The market has matured, and with that maturity, the training wheels—and the subsidies that came with them—are being ruthlessly removed.
Power shift: the old guard strikes back
For years, Tesla set the pace, but 2025 marked a clear turning point in the balance of power. The American pioneer faced a painful correction. Despite a growing overall market, Tesla saw sales of the Model Y and Model 3 drop by 34% and 29%, respectively, in the first eight months of 2025. In January, sales nearly halved compared to the previous year.
The winner of this musical chairs game is the Volkswagen Group. Despite internal struggles, the German giant dethroned Tesla as the best-selling EV brand in Europe. Skoda, in particular, proved to be a strategic hit: the new Elroq was the best-selling model in the EU in October 2025. This is no coincidence but the result of industrial-scale production finally gaining momentum.
Europe’s dilemma: numbers vs. sentiment
Macro figures paint a picture of a sector swimming against the tide. The market share of battery-electric vehicles (BEVs) in the EU climbed to 16.9% in November, a solid increase from 2024. In October, it even reached 20.6%. However, growth is uneven, indicating a fragmented internal market.
While Germany recorded growth of over 40% after the subsidy debacle of 2024, France continues to struggle with volatility, despite a record month in November, attributable to the Renault 5. The absolute bloodbath, however, is happening in the internal combustion engine segment: the market share of gasoline and diesel cars has plummeted, dropping to 32.1% in October. Consumers are voting with their wallets, but the road to full electrification is bumpier than Brussels’ spreadsheets suggested.
The Netherlands: no more subsidies
The Netherlands serves as the canary in the coal mine for a post-subsidy era. With a market share peaking at 48.3% in November 2025, the transition appears complete. Appearances are deceiving, however. The market is artificially propped up by business drivers anticipating the increase in the fiscal addition (to 22% in 2026).
For private buyers, the party is over: the purchase subsidy was scrapped entirely in 2025. The government is betting that the market can stand on its own, but the reality is that private demand risks collapsing without this fiscal crutch. The disappearance of the SEBA scheme for company cars amplifies this effect. We are witnessing a classic "policy cliff": the market is forced to go cold turkey, which will inevitably lead to withdrawal symptoms in the short term.
Brussels blinks: strategic sovereignty comes at a price
The biggest news of 2025 did not come from factories, but from meeting rooms in Brussels. Under intense pressure from the automotive lobby and member states such as Germany and Italy, the European Commission relaxed the dogmatic ban on combustion-engine cars by 2035. The target has been softened to a 90% emissions reduction, with a crucial loophole for e-fuels and hybrids.
This political concession gives manufacturers like BMW and Porsche the much-needed "breathing room" to continue milking their profitable combustion models. At the same time, it is a dangerous gamble. While Europe hesitates, China charges ahead. The EU is trying to counter this with a €1.8 billion investment in local battery production. Still, in a market where Chinese brands like MG and BYD already command a 7.4% market share, this feels like building a dike while the water is already flooding over the quay.
Conclusion: the hard sanitation begins now
2025 was the year of correction, but 2026 will be the year of truth. The market is shifting from a subsidy-driven playground to a cutthroat displacement market. The losers are clear: brands without scale (such as Smart, which saw a 97% drop) and manufacturers that bet too long on a single horse. The relaxation of the 2035 rules provides respite, but not salvation. For the European auto industry, the message is clear: innovate faster or become irrelevant. The era of "free money" is over; the battle for the autonomous, affordable European EV is only just beginning.