European car sales drop in January as falling combustion engines outweigh EV gains

Sales of fully electric car sales In Europe were up 37.3 per cent in January, industry data showed on Tuesday, although the sharp rise was not enough to compensate for a drop in petrol and diesel vehicles, leaving overall sales down by 2.1 per cent.

Figures from the European Automobile Manufacturers Association (ACEA) showed that all-electric brand Tesla (TSLA.O) saw a 45.2 per cent drop in the European Union, Britain and the European Free Trade Area, while sales at its Chinese competitor SAIC Motor (600104.SS), which owns the MG brand, were up 36.8 per cent.

WHY IT'S IMPORTANT

The EU executive will present auto sector plans on March 5, following talks with automakers, unions and interest groups.

EU carmakers, which are struggling to compete with Chinese rivals and bracing for US tariffs, are urging the Commission to grant relief from potential fines resulting from CO2 car emission targets that came into effect in January.

Some automakers have increased the prices of petrol engine models to encourage EV adoption, but the industry fears that customers will simply buy fewer cars.

Electric transport groups, instead, claim that any push to weaken the targets will disrupt investments in EV infrastructure and hamper the bloc's competitiveness.

BY THE NUMBERS

January sales in the EU, Britain and EFTA fell slightly below 1 million cars sold, the lowest volume since August.

Registrations at Volkswagen (VOWG_p.DE) and Renault (RENA.PA), opens new tab grew by 5.3 per cent and 5.4 per cent respectively, while they fell by 16 per cent at Stellantis (STLAM.MI).

The dot plot shows the share of new car registrations in the EU between January and August in 2023 and 2024. The 2023 dot is coloured grey while the 2024 dot is coloured green.

The dot plot shows the share of new car registrations in the EU between January and August in 2023 and 2024. The 2023 dot is coloured grey while the 2024 dot is coloured green.

In the EU, January sales fell by 2.6 per cent, even as the registrations of battery electric (BEV) and hybrid electric (HEV) cars grew by 34 per cent and 18.4 per cent respectively. Plug-in hybrids (PHEVs) sales were instead down by 8.5 per cent.

Electrified vehicles - either BEV, HEV or PHEV - sold in the bloc accounted for 57.2 per cent of passenger car registrations in January, up from 47.4 per cent in the previous year.

Among the largest EU markets, Spain sales increased by 5.3 per cent, while in France, Italy and Germany they dropped by 6.2 per cent, 5.8 per cent and 2.8 per cent. In Britain they were down 2.5 per cent.

CONTEXT

While battling to bring down high costs in home markets and fighting competition from China, European carmakers are also preparing to face potential import tariffs imposed by US President Donald Trump.

Trump has raised tariffs on aluminium and steel and threatened a 25 per cent tariff on imports from Mexico and Canada, as well as on all autos and semiconductors.