In 2023, Tesla surpassed Nissan and Volvo as battery-electric vehicles (EVs) neared the sales of diesel cars. For the first time in Europe, EV sales exceeded two million units, with a total of 12.79 million cars sold in the calendar year.
A 28% surge in electric car sales propelled Europe’s new car market to its strongest performance since the Covid pandemic, as reported by industry analyst Jato Dynamics. In 2023, a total of 12,792,151 cars were sold across Europe, marking a 14% increase from 2022 and a 7% rise from 2020.
Jato Dynamics analyst Felipe Munoz characterized the increase as a normalization of the market, with the supply chain disruptions from the pandemic largely resolved. However, Munoz noted that it is unlikely that sales volumes will surpass the 15 million units recorded in 2019, citing changing attitudes towards car ownership and the increased cost of purchasing a new car. He added that purchasing a vehicle has become more expensive, and attitudes to ownership continue to change. Despite the growth, sales in 2023 were still 19% below the 15 million units sold in 2019. The growth was driven by strong demand for new vehicles in markets including the UK, France, Italy, Spain, Belgium, Portugal, Croatia, and Cyprus. However, the impact of high-interest rates was evident in Germany, which remains the largest market for new vehicles in Europe. Munoz explained that some countries were more exposed than others. For example, we saw lower growth rates in Germany due to declining exports and concerns about the overall health of its economy.
Battery Electric Vehicles (BEVs) Drive Growth
BEVs were a major driver of growth in Europe’s new car market in 2023, accounting for 15.7% of the total market share with 2,011,209 units registered. This marked a new high for the category, almost equaling the 2,049,157 registrations of diesel cars. Europe solidified its position as the world’s second-largest market for BEVs, trailing only behind China (~5 million units) and ahead of the US (1.07 million units).
Fleet and business registrations of BEVs surged by 51%, compared to a 4% rise for private buyers. Notably, only 39% of overall BEV registrations were made by private buyers, a decrease of nine points from 2022. Munoz emphasized the importance of attracting private buyers by noting that the lack of interest from private buyers is a major hurdle for the industry to overcome. Sales to private individuals tend to be the most profitable for carmakers, so it’s imperative that they do more to attract this type of customer.
BEVs gained market share fastest in Finland, Denmark, Belgium, the Netherlands, and Luxembourg, rising from an already strong base in these markets. Strong growth was also recorded in markets where BEVs have a small market share, such as Slovenia (5.0% in 2022 to 9.0% in 2023), Estonia (3.4% to 6.8%), and Latvia (6.6% to 9.0%). However, the market share for BEVs in Croatia dropped from 3.2% in 2022 to 2.9% last year. The UK market remained stable, with a slight drop from 16.6% in 2022 to 16.5% in 2023, while minor growth of 0.5 points was recorded in Italy. Regionally, Scandinavia leads Europe by a significant margin, with BEVs representing 46% of the total market, followed by Northern and Central Europe (19% market share), Southern Europe (9.4%), and Eastern Europe (5.3%). Munoz highlighted, “The shift to BEVs is taking place at four different speeds.”
Chinese Brands and Tesla the Big Disruptors
Another significant change in the European automotive landscape in 2023 was the continued penetration of Chinese car brands. Seven new brands entered the market last year, joining the 23 brands already available in 2022. Overall, Chinese brands registered 321,918 units in 2023, a 79% increase year-on-year. Munoz commented that although Chinese brands recorded a record market share of 2.6% in 2023, up from 1.7% in 2022, claims of an ‘invasion’ have been overstated.
Only eight of the 30 Chinese brands available in Europe registered more than 1,000 units, with MG accounting for 72% of the total. The brand, now under the ownership of China’s SAIC Motor, saw volumes more than double from 113,182 units to 231,818 units last year, achieving a market share of 1.81% and becoming the 20th best-selling brand in Europe. MG outsold Cupra, Suzuki, Mini, and Mazda and was less than 14,000 units behind Spain’s Seat in the overall rankings.
Meanwhile, Tesla continued its extraordinary ascent up the brand rankings. The 18th most-registered brand in 2022, it has now leapfrogged Nissan and Volvo, rising to 16
