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Europe flooded with EVs as Trump prepares to eliminate U.S. tax credit

Published: 05 Aug. 2025, 18:26

Export vehicles sit parked on the auto terminal at Pyeongtaek Port in Pyeongtaek, Gyeonggi, on May 20. [NEWS1]

With U.S. EV subsidies set to end in October, global automakers are shifting their attention to Europe, where rising demand and aggressive government incentives are driving a fierce race for market share — especially in the compact EV segment.

European car sales fell 0.3 percent year-over-year in the first half of 2025 to 6,844,426 units, market research firm JATO Dynamics said Tuesday.

But EV sales alone reached 1,193,397 units during the same period, a 25 percent increase from the first half of last year. This is the first time Europe has sold more than 1 million EVs in a six-month span.

Stricter carbon emission regulations by the European Union and an influx of competitively priced Chinese EVs have accelerated automakers’ EV rollouts across the continent.

The shift in focus to Europe comes as the United States, once the world’s largest EV market, prepares to terminate its $7,500-per-EV tax credit. That move is likely to dampen demand.

U.S. EV sales already show signs of slowing, with data from Cox Automotive showing that total U.S. vehicle sales rose 1.5 percent in the second quarter to 4,191,162 units from the previous year. EV sales dropped 6.3 percent to 308,039 units.

Cox Automotive warned in a July report that while the third quarter may see a short-term rebound ahead of the tax credit expiration, the market could collapse in the fourth quarter.

By contrast, European governments are ramping up incentives to stimulate EV adoption.

Britain now offers subsidies of up to 10 percent for new EVs priced below 37,000 pounds ($49,000). Germany introduced a program that grants corporate buyers a tax credit covering 75 percent of the purchase price of electric vehicles, and Italy plans to offer up to 11,000 euros ($12,600) in EV subsidies starting in September.

Global automakers are adjusting their strategies accordingly. Hyundai Motor and Kia introduced the EV3 in Europe in the second half of last year.

Hyundai Motor plans to release its large electric SUV, the Ioniq 9, in the third quarter, followed by the electric sedan Ioniq 6 and hydrogen EV Nexo in the fourth quarter. The company will also unveil a new compact electric SUV at the IAA Mobility 2025 expo in Munich in September.

Kia's EV3 [NEWS1]

Kia, which launched the EV3 last year, plans to expand its EV lineup in the third quarter with the EV4, EV5 and PV5. The company is also preparing to launch the EV2, a compact and affordable SUV tailored to European tastes, next year.

Toyota Motor, which previously focused on hybrids, is also pivoting. The company plans to introduce 14 electric models in Europe by next year, including the C-HR+ SUV and a new bZ4X.

“The end of EV subsidies in the United States is shifting the strategic weight of the global market toward Europe,” said Lee Ho-geun, automotive engineering professor at Daedeok University. “Europe’s strong policy support and rapid expansion of EV infrastructure will make it the decisive battleground for automakers in the second half.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YOUNG-WOO [[email protected]]