EV Transition Stalls as Europe Retreats and China Races Ahead: Bloomberg
For the last few years, electric vehicle transition seemed to move swiftly from niche experiments to mainstream options, supported by government subsidies, falling battery costs and aggressive investments by automakers.That momentum has now softened. Governments have rolled back incentives, consumers have balked at high prices and patchy charging infrastructure, and political priorities have shifted. In the US, President Donald Trump has dismantled fuel-efficiency standards introduced by the previous administration and removed EV subsidies. In Europe, long seen as the standard-bearer for climate policy, policymakers are retreating from what once looked like a firm deadline for ending the combustion-engine era.
Europe Hits the Brakes
In 2022, the European Commission told automakers that from 2035, all new cars and light-utility vehicles sold in the bloc would have to be zero-emission. At the time, the policy sent a clear signal: the future was electric.
But EV sales growth has slowed, and carmakers are now forecasting strong demand for combustion-engine vehicles well beyond the next decade. Mercedes-Benz Group AG, Porsche AG and Volkswagen AG have scaled back EV investments and lobbied Brussels to reconsider the ban, warning that eliminating fossil-fuel cars while customers still want them would damage profits and threaten jobs.
Carmakers Adjust Their Playbooks
The industry has extended plans for hybrid models and advised suppliers to be ready to provide components for non-EV vehicles beyond 2035, Bloomberg reported. BMW AG and Volkswagen are also exploring the addition of range extenders in some electric models, hedging against slower-than-expected EV adoption.
Globally, EV demand is still growing but not as fast as before. Sales of all-electric passenger vehicles and plug-in hybrids rose 26% in 2024, down from 34% the previous year, according to BloombergNEF’s Electric Vehicle Outlook.
China continues to dominate. Nearly two-thirds of the 17.6 million EVs sold worldwide last year were in China, BNEF estimates. In the US, EV sales increased 12% in the first three quarters of 2025, according to Cox Automotive, despite the elimination of subsidies under the Trump administration. That growth is expected to weaken further as fuel-efficiency standards are relaxed.
Why Buyers Are Hesitating
Early adopters were drawn to EVs by novelty and technology: large screens, advanced software and the appeal of being first. The next wave of buyers is proving tougher to convince. They are more price-sensitive, more skeptical and more concerned about charging access, especially in the US, where charging infrastructure remains concentrated in cities and along the coasts.
In Europe, the rollback of subsidies has been a key drag. Without incentives, EVs remain significantly more expensive than comparable combustion-engine cars. In 2024, all-electric vehicles were, on average, 30% more expensive in Europe and 27% pricier in the US.
China offers cheaper EVs, but Western governments have erected tariffs and trade barriers to keep manufacturers such as BYD Co. from undercutting domestic automakers.
Industry Consequences
The slowdown is reshaping corporate strategy. Since 2023, legacy automakers have cut their combined 2030 EV sales targets by more than 5 million units, down to 21.7 million. Even Tesla Inc., once the bellwether of the EV revolution, has stopped emphasizing its ambition of delivering 20 million vehicles annually by 2030. Tesla has been overtaken by BYD, and its deliveries are set to fall for a second consecutive year.
Recognizing weaker momentum, the EU granted automakers an extra two years to comply with tougher emissions standards, sparing them billions of euros in fines. To stay within fleet pollution limits, companies have increasingly purchased emissions credits from pure-play EV makers such as Tesla and Volvo Car AB.
Meanwhile, China’s rapid electrification is intensifying competition. Foreign brands are losing ground in the world’s largest car market, once a major profit engine for Western manufacturers. Even at home, European carmakers face growing pressure from Chinese imports, with EU tariffs offering only partial protection.
Jobs, Politics and the Climate Trade-Off
At stake is more than just market share. EVs are central to global climate strategies, but they collide with political and economic realities. Electric cars require far fewer parts than combustion vehicles, making them cheaper to assemble but also less labor-intensive. Governments are acutely aware that a rapid transition could put hundreds of thousands of workers out of jobs, a politically fraught outcome.
A slower shift delays emissions reductions and prolongs urban air pollution. It also postpones the point at which Western EV manufacturing reaches the scale needed to compete with China. Yet opening markets to cheaper Chinese EVs would undermine domestic automakers and deepen China’s dominance of green technologies.
Europe’s ambitions to build a local battery industry have already stumbled. According to a Bloomberg report last year, 11 of 16 planned European-led battery factories have been delayed or canceled.
Is a Revival Possible?
There are tentative signs of optimism. BloombergNEF forecasts global EV sales growth of 25% in 2025, with EVs accounting for 56% of passenger vehicle sales by 2035. China will remain the growth engine, supported by an extended vehicle scrappage scheme that incentivizes consumers to replace older, high-emission cars with electric ones. Globally, governments are reconsidering whether to restore buyer incentives to revive demand.
Automakers, for their part, are finally delivering more affordable models. Renault’s all-electric R5 is priced below €25,000, with a €20,000 electric Twingo set to follow next year. Stellantis’ Citroën e-C3 starts at €14,990 in France for customers eligible for a government social lease. Volkswagen’s upcoming electric ID. Polo is also expected to cost less than €25,000.
According to Brussels‑based NGO Transport & Environment, up to 2 million all-electric vehicles could be sold in the EU this year under an optimistic scenario. So far, battery-electric sales have reached nearly 1.5 million in the first ten months, giving EVs a 16.4% market share, up from 13.2% a year earlier but still far from what’s required to reach a fully electric market by 2035.
