Europe car sales jump 21% in August as EVs help extend growth streak

New-car sales climbed for the 13th consecutive month in Europe, with electric vehicles driving growth before becoming the latest focal point of global trade tensions.

New-car registrations rose 21 percent to 904,509 units in August, industry association ACEA said in a statement on Wednesday.

Sales of EVs doubled ahead of the European Commission opening an anti-subsidy investigation into Chinese electric cars this month.

The data released by Europe’s auto trade group provides a limited window into the dynamics that precipitated the probe.

The association does not break down regional sales by country of origin or detail each manufacturer’s registrations by powertrain.

But the strong demand for EVs — which exceeded 20 percent of EU sales for the first time — speaks to why Chinese companies are increasingly keen to establish a foothold in the market.

Automakers led by Volkswagen Group and Stellantis continue to benefit from orders that stacked up during a prolonged shortages of parts stemming from pandemic disruptions. That momentum will be tested by central banks raising the cost of borrowing to tame inflation.

Demand exceeding supply “could reverse in the second half as vehicle production normalizes and orders soften,” Bloomberg Intelligence analysts Gillian Davis and Michael Dean said in a note published this week.

Sales are still down roughly a quarter from pre-pandemic levels.

Tesla — which imports Model 3s from its Shanghai plant — has repeatedly cut prices this year, while Chinese companies including BYD and Nio are pushing into Europe.

Even so, executives including Mercedes-Benz CEO Ola Kallenius have spoken out in favor of open trade.

The European Commission’s China probe opens the door to potential retaliation by Beijing that could hit the bloc’s automakers hard and risk slowing EV adoption.

For now, demand for battery-powered cars continues to climb. The number of new EVs registered across Europe soared 102 percent in August to just shy of 197,000 cars.

Buyers in Germany registered almost 87,000 full-electric vehicles in August, a 171 percent increase.

France, which is in the process of redesigning its EV subsidies to bolster sales of locally made models, ranked a distant second, with 19,700 EVs sold. In the U.K., registrations jumped 72 percent to just over 17,000 vehicles.

VW sold the most passenger cars in the region across all fuel types, with around 240,500 registrations, up 21 percent from a year ago. The automaker is also leading in full-electric cars, according to BloombergNEF, although job cuts at its main EV factory in Germany suggest it’s bracing for slowing demand.

Stellantis, which is among the automakers dealing with a strike by the United Auto Workers union in the U.S., increased sales by 6.3 percent to around 145,400 vehicles last month.