EV sales in Europe set to grow, but ecosystem only starting to take shape
Electric vehicles (EVs) and the ecosystem that supports them have reshaped the auto industry in Europe in the past decade and opened the way for a fleet of new mobility products and services.
Electric vehicles (EVs) and the ecosystem that supports them have reshaped the auto industry in Europe in the past decade and opened the way for a fleet of new mobility products and services. EVs accounted for around 24% of new car sales in Europe last year and volumes look set to rise in 2026. But the route ahead is far from clear.
“We've got past the early adopters’ phase of the transition. But we're still in what is often called the early majority segment,” says Amelia Bradley, Associate Partner at consulting firm Corporate Value Associates (CVA). (20:20)
“Appetite has increased. Acceptance has increased. People who are pragmatic are now willing to take electric vehicles. However, there's still a fragile sentiment in terms of trusting the product and trusting the promise of the product.” (20:34)
Bradley was speaking at an online event hosted by the Qorus Mobility Community and CVA. Speakers from CVA as well as representatives from Hyundai Capital Bank and vehicle leasing group Ayvens discussed the state of Europe’s EV ecosystem and the forces changing it.
Key takeaways:
- The market for EVs in Europe has passed the early adopters’ phase but is still fragile.
- EVs will likely come to dominate the European vehicle market, but regulatory policy remains the primary factor governing the pace of adoption.
- CVA has identified seven drivers that will shape the EV market and ecosystem: regulation, Chinese OEMs, software defined vehicles and smart EVs, BEV asset management, battery TCO, EV charging infrastructure, and customer acceptance.
- The rising importance of software in EVs will further disrupt the EV ecosystem.
- BEV owners need to employ new tools and strategies, such as multicycle usership, to better manage their assets.
- Ecosystems that address battery health, repair, replacement, and reuse have been slow to emerge but will become increasingly important.
Check out the event highlights
CVA Partner Markus Collet points out that stronger customer demand on its own won’t spark a surge in EV sales.
“We are not in a demand market. We are in a market that is actually very much structured by regulation.” (58:54)
CVA has identified seven drivers that will shape Europe’s EV market and ecosystem over the next five years. The full effects of those forces are still unclear. Many firms are grappling to find sustainable and profitable business models, says Collet.
These are the seven drivers identified by CVA.
1. Regulation
Despite recent uncertainty, regulations will continue to shape the development of the EV ecosystem in Europe. Key regulations are still being debated. In December 2025, for example, the European Commission proposed revising its 2035 ban on the sale of new internal combustion engine (ICE) vehicles and introducing instead a 90% tailpipe emissions reduction target for new cars and vans. The Commission also proposed regulations to accelerate the adoption of zero- and low-emission vehicles in corporate fleets, with national targets starting in 2030. If adopted, these regulations would push corporate fleet operators, leasing companies, and rental firms to increase EV purchases.
Bradley adds that the political environment in some countries in Europe is creating further uncertainty. The Conservative Party in the UK, for example, has vowed to remove EV regulatory incentives should it come to power.
Speakers at the online event agreed that while EVs will eventually dominate the European vehicle market, regulatory policy is likely to be the primary factor governing the pace of adoption.
Half the executives polled at the event identified stable regulations as one of the biggest potential accelerators of EV adoption. A similar proportion of executives polled believe the EV ecosystem in Europe is only beginning to be established at scale. The regulatory framework implemented over the next five years will define much of its growth.
2. Chinese OEMs
Chinese vehicle manufacturers, or original equipment manufacturers (OEMs), have established a firm foothold in Europe and will likely extend their influence. Vehicles manufactured in China now account for more than 6% of Europe’s passenger car sales. And Chinese OEMs are well placed to benefit from the EU’s transition from ICE vehicles to EVs. China accounted for more than 60% of global EV sales in 2024.
Chinese OEMs have established a reputation for delivering high-quality products at attractive prices but to extend their market share they will likely have to broaden their offerings into solutions that include products and services from partners, says Bradley. Growth may be tempered by customer affinity with domestic OEMs and local tariffs and regulations. Collet points out that in Australia, where the auto market is unfettered by import tariffs, Chinese manufacturers have secured more than 17% of the passenger car market.
However, not all the Chinese OEMs entering the European market are likely to remain, cautions Michael Bodlée, Senior Sales Director and Deputy Managing Director at Hyundai Capital Bank Europe.
“Chinese brands are coming in quite frequently but not all of them will be able to survive.” (30:04)
3. Software defined vehicles (SDVs) and smart EVs
The rising importance of software in EVs will further disrupt the EV ecosystem. The growing influence of software in EV capabilities, what CVA terms “softwarization,” promises better customer experience, recurring revenues for service providers, and lower manufacturing and repair costs for OEMs. It is also likely to give vehicle owners greater control over the value of their asset. The increasing importance of software will affect the whole EV value chain, particularly among OEMs, digital service providers, leasing companies, fleet operators, and retail customers. However, some effects remain unclear, says Collet.
“When you sell a used car, do you sell only the metal? Do you also sell the features or will they remain with the OEM? There are a lot of implications for the entire value chain.” (15:20)
4. BEV asset management
Further advances in technology and the continued volatility of vehicle values will require battery electric vehicle (BEV) owners to employ new tools and strategies to improve the management of their assets. Key to better asset management will be integrated multicycle strategies that repurpose BEV and battery assets. Such strategies allow asset owners to offer customers more flexible and cost-effective usage contracts. Multicycle strategies can also mitigate risk by enabling owners to retain vehicles longer, extend depreciation, and reduce dependency on used vehicle prices. Asset owners such as leasing companies and subscription service providers can generate further value from their BEV assets by orchestrating the full multicycle life of their vehicles and offering clients a basket of additional services and products.
Ensuring demand for used BEVs will be essential, says Michael Bodlée at Hyundai Capital Bank Europe.
5. Battery total cost of ownership
Battery ecosystems, which address requirements such as the health, repair, replacement, and reuse of those assets, have been slow to emerge but will become increasingly important. While batteries are a large part of the value of EVs, they also have their own lifecycles that are independent of the vehicles they power, says Collet.
“A battery has its own value chain. It doesn't stop with the end of a vehicle’s life. It can go on afterwards and be used for grid stabilization, golf carts, or recycling. This value chain is not at scale yet.” (18:20)
Advances in battery state of health (SOH) certification, improvements in how units can be repaired, and greater end-of-life options will quicken the development of battery ecosystems. To support their EV offerings, Ayvens is including battery SOH certificates with the vehicles it leases to customers while OEMs such as Hyundai and Kia offer warranties of up to seven years on the batteries in their cars.
6. EV charging infrastructure
Full-scale charging infrastructure has yet to be rolled out across Europe but coverage is sufficient to support growth in EV demand across most countries. However, many potential EV customers still see the cost of charging and patchy coverage as obstacles to adoption. These views are often influenced by negative media coverage that has highlighted high electricity costs and expensive public charging services.
EV product and service providers should focus first on the easily accessible 60% of consumers who have access to home or office charging before embarking on broader, more challenging strategies, says CVA’s Bradley.
Factors affecting the rollout of charging infrastructure include the “charging divide” where homeowners have greater access to charging services than people living in high-density apartments; the high structural costs of providing public charging sites; and continued lack of pricing transparency by suppliers.
7. Customer adoption
EV product and service providers need to promote the value of EVs across the vehicle value chain to bolster consumer confidence and increase demand. EV prices, which still tend to be higher than comparable ICE vehicles, together with consumer concerns about charging accessibility and costs as well as resale risks are the main obstacles facing firms promoting greater EV adoption. Cooperation and partnerships between EV ecosystem participants will be essential, says CVA’s Collet.
EVs have already reshaped Europe’s auto industry and are set to disrupt it further. The drivers identified by CVA will help define the EV ecosystem over the next five years but the nature and extent of such change is unclear. New regulations, rising competition, advances in technology, emerging battery value chains, and innovative approaches to asset management will all affect its development. Product and service providers will need to remain flexible as they look to build business models that are sustainable and profitable.
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