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Subsidies have been pivotal in driving the transition to electric vehicles, reducing the initial upfront costs for consumers. However, many European countries have been phasing out or reducing subsidies. As the end of 2024 approaches, shifts are on the horizon for the European subsidy landscape. Most notably recently, France and Spain have announced changes to their subsidy programmes. In light of stagnating European EV sales this year, changes to the subsidy and incentive environment will have an impact on the EV market’s future trajectory.
France cuts the size of its EV subsidy
Under the 2025 national budget proposal, France has indicated a reduction in its EV subsidy scheme, cutting the budget from EUR 1.5 billion to EUR 1 billion to address fiscal pressures. The programme currently offers subsidies ranging from EUR 4,000 to EUR 7,000 for the purchase of an EV priced below EUR 47,500, with the exact amount depending on household income. However, from 2025, these subsidies will fall to between EUR 2,000 and EUR 4,000. France also introduced an EV leasing scheme targeted at low-income households, allowing them to lease an EV for EUR100 per month or EUR150 for an electric family car. This scheme was paused after just two months due to its overwhelming popularity and limited budget, having been allocated EUR650 million in 2024. It is set to resume in the second half of 2025 with a reduced budget of EUR300 million, although details on its revised financing structure remain unclear.
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Spain is making plans for its new 2025 EV subsidy
Spain’s current EV subsidy programme, Moves III, is set to expire at the end of 2024. Operational since 2021 with a total budget of EUR1.55 billion, it has provided subsidies of up to EUR7,000 for EV car purchases, EUR 9,000 for commercial EVs, and additional incentives for electric motorbikes and scooters. A separate tax break for EV purchases is also scheduled to end this year.
Although the Spanish government has been delayed in announcing plans for a successor scheme, due to recent flooding in the country, early indications suggest some notable changes.
One of the expected adjustments is a shift to direct payments at the time of purchase, addressing delays of up to two years under the current system, which relied on Spain’s autonomous regions for disbursements. A centralised system is likely to streamline this process. However, key details, including the total budget, individual subsidy amounts, and whether the tax break will be extended, remain unclear.
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The incentive and subsidy landscape
Beyond France and Spain, few EU countries maintain substantial EV subsidies, as many nations have shifted to tax incentives instead. Poland and Portugal, which have both recorded strong EV market growth this year, offer relatively favourable subsidy environments. Germany, which unexpectedly ended its EV subsidy programme in December 2023, has retained its tax incentives, while Denmark and the UK have seen some of the strongest EV sales growth in Europe by relying primarily on tax breaks rather than direct subsidies.
What next?
According to Rho Motion’s BEV Price Tracker, BEVs in Europe remain, on average, 75% more expensive than their internal combustion engine counterparts. To ensure continued growth in EV sales, reducing this price gap through organic market changes will be essential.
More Information
For more information about the EV subsidy landscape see our research or get in touch.
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