European car sales rose in June after a surge in demand for electric cars in Italy as Prime Minister Giorgia Meloni’s government introduced long-expected subsidies.
New-car registrations in the EU, EFTA and U.K. markets climbed 3.6 percent to 1.31 million units last month compared to a year ago, the industry association ACEA said July 18 in a statement.
EV sales in the region were flat, rising just 0.1 percent to 208,872, after a slump in Germany and France offset the gain in Italy, where deliveries more than doubled.
Across Europe, market share for battery-powered cars declined slightly.
Europe’s EV shift has faltered due to high sticker prices and the removal of subsidies by a number of governments.
The lull is prompting companies such as Mercedes-Benz to push out EV sales targets while battery makers are reviewing projects.
Stellantis has halted EV output at its Mirafiori plant near Turin, and Volkswagen Group this month started proceedings that may see it shut a factory in Belgium making the electric Audi Q8 E-tron.
“Battery-electric vehicle losses remain too high, and investments need to be cut, and are being cut,” Citi analyst Harald Hendrikse wrote in a note this month.
In June, the share of full-electric vehicle registrations fell to 15.9 percent, down from 16.5 percent a year ago, extending a trend of disappointing EV sales for the year.
EV share has declined to 13.9 percent through June, compared with 14.2 percent a year earlier, in a reversal of expectations for the shift to gather pace.
High borrowing costs and muted growth across Europe are weighing on consumer sentiment across the market.
Auto sales in the European Union remained about 18 percent below pre-pandemic levels in 2019 during the first half of the year.
The outlook for Germany, Europe’s biggest economy, is dimming on the back of falling exports and political uncertainty in France, according to ZEW President Achim Wambach.
EV demand remains highly susceptible to buying incentives.
In Germany, Europe’s No. 1 market, the government suddenly stopped subsidies in December, leading to a 16 percent decline in registrations during the first half of the year. In Sweden, which also rolled back subsidies, sales fell by a fifth.
Demand for Tesla’s vehicles continued to wane across the region, with a 7.2 percent decline in June. Sales dropped 12 percent during the first half.
