Good incentives drive quadrupling of EV market share in Western Europe

Electric vehicles made up 20% of the world’s third largest car market in the fourth quarter of 2022, according to German-based Schmidt Automotive Research.

The data, which includes non-EU states like Norway, Switzerland, Iceland and the UK, shows that EV market share has surged from just 5% at the beginning of 2020 to over 20% by the end of 2022.

The final quarter of 2022 saw a big jump in sales due to a number of reasons. Many EV customers in Norway brought forward their purchases to 2022 to avoid the 25% VAT (value added tax like Australia’s GST) being applied to BEVs priced over NOK 500,000 (€45,000) for the first time.

A big part of Norway’s world leading EV growth has been the government’s policy to exempt EVs from the 25% VAT since 2001. Although VAT is now being reintroduced to EVs over NOK 500,000 (roughly $A70,000), the 21 year policy has served its purpose taking EV new car market share to 0ver 80%.

With most Norwegians aware that new petrol and diesel car sales will be completely banned by 2025, as well as 30-50% discounts for EV drivers on toll roads and ferries, it’s unlikely this figure will slide back over the next 2 years before full ban is in place.

Europe’s largest car market Germany also saw record EV sales with 471,000 fully electric BEVs sold in 2022 according to Schmidt.

According to Schmidt, Germany accounts for 30.7% of the total volume of EV sales in Western Europe. Like Norway, Germany has also wound back EV incentives reducing the maximum EV subsidy by €1,500 to €4,500 during 2023.

There are some indications that the German government’s decision to reduce EV subsidies may be premature after EV sales numbers dropped significantly in January However this may be in large part due to many January would-be EV buyers simply bringing forward their purchase to December.

Before the subsidy decrease, German pure EV market share hit a gobsmacking 33.2% in December. Time will tell if there’s any longer lasting impact or if that proportion continues to grow throughout 2023.

Fully electric vehicle market share in Europe is now 5 times higher than in Australia where despite good growth of a low base market share is still just 3.8%.

The big shifts being seen in the European market are proof that good government policies like vehicle emission standards and purchase incentives can really accelerate growth in the market and get it to an established level.

To reduce pollution in Australian cities and accelerate the transition away from fossil fuels, the Australian government should move quickly and follow Europe’s lead.