Surge in BEV sales drives Europe's new car registrations to biggest monthly increase since 2023

Industry Background

The European automobile market is experiencing robust growth not seen in a long time. According to the latest data from the European Automobile Manufacturers' Association (ACEA), new car registrations in the EU reached 1.41 million units in June 2025, up 13% year-on-year, marking the largest monthly increase since October 2023. This growth is primarily driven by battery electric vehicles (BEVs), whose sales surged 51% year-on-year, with market share jumping from 16.7% a year ago to 23.6%. Plug-in hybrid electric vehicles (PHEVs) also grew slightly to 10.1%, and together with BEVs accounted for 33.8%, surpassing the 28% share of traditional fuel vehicles (gasoline + diesel).

Key Drivers

France and Germany, the two largest BEV markets in the EU, contributed most of the growth after restarting subsidy programs. However, the rise is not limited to incentive policies: almost all European markets saw year-on-year growth in BEV sales, with Poland being the only exception. Persistently high fuel prices—partly due to geopolitical conflicts—have suppressed demand for internal combustion engine vehicles, accelerating the shift in consumption toward electrification.

Looking at the powertrain structure, the electrification trend is irreversible. In the first half of 2025, the cumulative market share of BEVs reached 20.7% (compared to 15.6% in the same period of 2024). Hybrid electric vehicles (HEVs) still lead with 37.3%, while the combined share of gasoline and diesel has dropped from 37.8% a year ago to 29.7%. Gasoline vehicle sales in France and Spain fell by 34.2% and 18.5%, respectively.

Industry Impact

Chinese brands are gaining market share in Europe. Registrations of BYD and SAIC's MG in the UK both increased by more than one-third, and their combined European market share rose from 3.4% to 5.4%. Reuters data shows that BYD, Chery, and Leapmotor's sales in June 2025 were about three to six times those of the same period last year. Chery's Jaecoo 7 became the best-selling model in the UK as early as March.

The rapid expansion of Chinese brands has forced traditional OEMs to lower prices and expand incentives to maintain their positions. BYD is building a factory in Hungary, Ford and Geely have reached a joint manufacturing agreement in Spain, and Stellantis has opened its European factories to Leapmotor and Dongfeng. BYD and XPeng are respectively in talks with Stellantis and Volkswagen about acquiring idle factories in Europe.

The growth in registrations of traditional automakers cannot hide a deep crisis. Volkswagen, Stellantis, and Renault saw registration increases of 3.6% to 7.3% in June, but Volkswagen is considering cutting another 50,000 jobs on top of the 50,000 already announced, closing up to four German factories, and halving its 150 models. BMW, Mercedes-Benz, and Renault are also advancing their own efficiency reforms.

Challenges and RisksThe June data is not a false signal of market recovery, but interpreting it as a recovery signal for traditional manufacturers is misleading. Growth is concentrated in two areas: BEV incentives and Chinese brands, which are precisely the sources of cost pressure for traditional OEMs. Therefore, the month that recorded the best registration performance since 2023 actually strengthens, rather than weakens, the rationale for restructuring at automakers like Volkswagen.