ACEA reports highlights disparities in European EV incentive schemes

As Europe grapples with sluggish electric vehicle (EV) adoption, the European Automobile Manufacturers’ Association (ACEA) has issued a sharp warning: without better coordinated and expanded incentive schemes, the continent risks falling short of its climate and industrial goals.

In newly released reports, the ACEA provides a detailed overview of the current tax and incentive systems for zero-emission vehicles across Europe. The findings reveal a deeply fragmented approach, with over 30 separate schemes operating across member states, many of which vary widely in both scope and impact.

“Europe’s electric vehicle market is still developing and hasn’t hit the crucial tipping point for mass adoption yet. Incentives are one key piece of the puzzle to help drive demand and get us to this common goal.”  

Despite ongoing advancements in EV technology and the increasing availability of models priced under €30,000, high upfront costs remain a significant barrier for many European consumers. With battery-electric vehicles (BEVs) still considerably more expensive than their internal combustion engine (ICE) counterparts, incentives remain crucial to unlocking mass-market appeal.

Germany’s abrupt end to its EV purchase incentives at the close of 2023 is a stark example of what can go wrong. The move led to a dramatic 30% drop in BEV sales, demonstrating the fragile state of demand in the absence of supportive policy. ACEA warns that such premature withdrawal of support, particularly before markets are mature, risks undoing years of progress.

The ACEA reports also underscore that the situation is deteriorating in some parts of Europe. Eight EU member states currently offer no purchase incentives for electric cars—up from six last year. For heavy-duty vehicles (HDVs), including trucks and buses, the picture is even more concerning: over a third of member states offer no acquisition incentives at all. Infrastructure support for HDV charging remains almost non-existent, with only 12 countries offering such incentives.

The ACEA notes that, while robust incentive schemes have been proven to work, this is not just about money on the table. It’s about ensuring consistency, predictability, and above all, coordination. Fragmentation across the continent is holding back progress.

In contrast to Europe’s patchwork of national schemes, China’s unified and centrally directed approach to EV adoption has helped propel it to global leadership in the electric mobility space. ACEA argues that without similar pan-European efforts, the EU risks falling behind in the race to decarbonise transport and remain competitive in automotive innovation.

Belgium is highlighted as a positive example, where strong incentive programs have helped increase EV uptake significantly. But such progress remains isolated. In several Central and Eastern European nations, weaker or non-existent schemes have led to lagging adoption rates, further emphasising the divide.

ACEA also voiced disappointment that the EU’s recently announced Automotive Action Plan contains no new earmarked funding for demand-side incentives, despite previous commitments from EU leadership. The organisation called on the European Commission to urgently revive and implement the proposed pan-European subsidy initiative, which could help bridge the gap and streamline EV adoption across borders.

As the EU edges closer to 2035’s zero-emission targets, ACEA’s message is clear: without swift and coordinated action, the EV transition risks stalling – with far-reaching consequences for the environment, industry, and consumers alike.