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Do PHEVs still have a future in Europe?

Frankfurt, 18.10.22

Dataforce Infografik development PHEV market share

The internal combustion engines with an additional electric option occupy a unique place. They are supposed to combine the best of both worlds without offering any great disadvantages. But does this promise correspond to reality? Dataforce took a closer look at the future of PHEVs in Europe.

Negative trend emerging in Europe

At the European level (EU28+EFTA), PHEVs have grown steadily in recent years, but have now seemingly reached a plateau in 2022. This year’s market share to date (Jan.-Aug.) is 8.4 %, matching the 2021 figure of 8.4 %.

This development also seems coherent, as PHEVs are primarily looked on as a bridging technology on the move toward full electrification. Currently, the development of fully electric vehicles (BEVs) is making significant leaps in new registrations and is increasingly becoming the focus of manufacturers and customers. Since Q2 2021, the market share of BEVs has been higher than that of PHEVs every quarter.

Regional differences in development

However, regionality must also be considered when analysing the development, as there are also exceptions in the European sphere. For example, PHEVs can still grow in markets without sufficient charging infrastructure and thus still fulfil their purpose as a bridging technology.

Spain and Italy, as well as many countries in Eastern Europe, are examples. In Spain, the market share (Jan.-Aug.) could even grow from 4.5 percent in 2021 to 5.6 percent in 2022. So, the plateau is yet to be reached here.

Dataforce Infografik development PHEV market share Spain

Fleets as drivers of PHEV development in recent years

PHEVs have done particularly well in the fleet market in recent years. In terms of volume, about twice as many vehicles were registered in this segment than in the private market. The market share was also three times as high in some places.

In addition, there were often lucrative tax benefits for companies in the individual countries, which made a PHEV purchase even more attractive than direct purchase premiums.  In many countries, the amount of company car tax depends directly on the CO2 emissions, and here, according to current WLTP cycles, PHEVs only emit a fraction of what a combustion car does.

Dataforce Infografik development PHEV market share private true fleet

Cuts in subsidies make PHEVs less attractive

These advantages ensured that a higher purchase price of PHEVs compared to pure combustion vehicles could be compensated. In many countries, however, the benefits for PHEVs are now being withdrawn.

Recently, for example, the German Ministry of Economics announced that PHEVs will no longer be eligible for subsidies from 2023. The same applies to the third largest car market in Europe, namely France. There, too, PHEVs will no longer be subsidised for purchase from 2023. These cuts will make PHEVs less attractive, especially for companies, and will lead to a decline in new registrations.

Grafik Förderung EN

All relevant information on tax benefits and subsidies is summarised concisely in the Dataforce Tax Guide. Please feel free to contact Dataforce if required.

Manufacturers send a clear message: BEVs instead of PHEVs

A look at the Dataforce Model Lifecycle Calendar gives an interesting preview of the manufacturers’ planned model futures. In the years 2023 – 2025, a total of around 160 new BEVs will come onto the market, including completely new vehicles or fully electric variants of current models. For PHEVs, this number is only around 50.  As this figure already includes model changes of existing generations, completely new PHEV models will therefore remain rare.

The lack of new PHEV models will have a significant impact on new registrations of the fuel type. Buyers tend to prefer new vehicles that have technology on board at the cutting edge. All this will not be available in sufficient quantities for PHEVs in the future and supply will be limited.

From a manufacturer’s point of view, the increasing demand for BEVs also means that a diminishing number of PHEVs will be needed to meet the EU’s CO2 targets. In addition, there is the risk that the EU could re-evaluate the CO2 emissions of PHEVs, as more and more studies question the low CO2 values in everyday life.

Dataforce Infografik Model Lifecycle Calendar EN

Larger vehicles are already being replaced by BEVs, range hardly a concern any more

In the past, PHEVs were convincing mainly because one did not have to worry about range. But if we look at larger models, medium to large BEVs such as the Tesla Model Y or the Kia EV 6 now have similar ranges. Charging breaks are also getting shorter and the infrastructure of fast chargers is improving.

This means that PHEVs are shifting to smaller vehicle classes for which there are currently hardly any competitive BEV alternatives. So, PHEVs still have the advantage here. However, this is likely to change from 2024/2025 onwards, when manufacturers will bring high-volume small and compact BEV cars onto the market that have competitive ranges, such as VW with the ID.2. By then, at the latest, the days of PHEVs could well be numbered.

Dataforce Infografik SUV market shares

Publication only with indication of source (Dataforce).

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