Europe’s new-car market returned to growth last year, supported by rising demand for electrified powertrains, while the global automotive industry continued to adjust to shifting trade dynamics and strategic realignments. Developments ranged from progress in EU–India trade relations to major production decisions by Tesla and expansion plans from Chinese carmaker Chery.

EVs underpin EU new-car growth in 2025

Europe’s new-car market closed 2025 in positive territory, with registrations across the EU’s 27 member states rising 1.8% year on year. The improvement was driven by six consecutive months of growth at the end of the year.

Data from ACEA shows electrified vehicles continuing to gain ground. Battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) together accounted for nearly 2.9 million registrations during the year, representing around 27% of the total market.

BEVs alone made up 17.4% of all new-car deliveries. Despite this shift, petrol cars remained a major force, still capturing more than a quarter of total registrations.

Hybrids—combining full and mild-hybrid systems—emerged as the most popular powertrain overall in 2025, topping the rankings for the first time.

At a country level, Spain stood out with double-digit growth in new-car registrations, supported by strong EV demand and incentives. Germany, Europe’s largest market, returned to modest growth, while France and Italy both recorded year-on-year declines.

Uncertainty clouds Spain’s next EV incentive scheme

In December, Spain confirmed that its long-running MOVES programme would be replaced by the new Auto 2030 Plan, also known as PlanAuto+. The scheme is due to launch at the beginning of 2026, but key funding criteria have yet to be published.

This delay has raised concerns about a potential gap in incentives, which could slow the market. Under the new structure, subsidies would be managed centrally rather than by Spain’s autonomous regions. The government has earmarked €400 million for EV purchase incentives in 2026, broadly in line with previous annual MOVES budgets.

However, according to reports from electrive, approval is being held up by the Ministry of Economic Affairs. The intention is to move towards a system similar to France’s, where incentives are linked to a vehicle’s overall CO₂ footprint. While the original plan aimed to favour EU-built EVs without excluding others, eligibility criteria are now expected to become more restrictive.

EU carmakers welcome India trade agreement

European manufacturers have reacted positively to the conclusion of free-trade negotiations between the EU and India. ACEA said the agreement could significantly improve access to a market of around four million annual passenger-car sales, where import tariffs can reach as high as 110%.

While quotas and residual duties will still limit the full impact, the industry expects meaningful benefits once the detailed terms are assessed.

India is also rising in strategic importance for European brands. Renault has identified the country as a key growth market, citing improved access for EU manufacturers following the trade deal.

Tesla cuts models as focus shifts to AI and robotics

Tesla is preparing to discontinue two of its longest-running vehicles as it accelerates investment in artificial intelligence and robotics.

The move follows a challenging set of fourth-quarter results that underlined a difficult year for the carmaker. According to the Financial Times, Tesla plans to end production of the Model S and Model X in the next quarter.

The report also suggests that Tesla’s California facility could be repurposed as a manufacturing hub for its Optimus humanoid robots. In parallel, the company is expected to invest around $2 billion (€1.7 billion) into Elon Musk’s xAI venture.

Chery eyes UK manufacturing base

Chinese manufacturer Chery is exploring the possibility of producing vehicles in the UK, potentially using an existing plant owned by Jaguar Land Rover.

Sources cited by the Financial Times indicate that discussions are under way to use a current manufacturing facility to build Chery’s EVs in Britain. The UK government has reportedly been courting the company for several years.

Chery’s Omoda and Jaecoo brands are among the fastest-growing Chinese marques in the UK, alongside rivals such as BYD. The country has seen a surge of competitively priced Chinese vehicles, partly as manufacturers seek alternatives to EU markets where tariffs on China-built EVs have increased.

Chery has already entered the UK market with the Tiggo 7, Tiggo 8 and Tiggo 9, underlining its longer-term ambitions in Europe.