Electric vehicle (EV) sales in the European Union surged in the first quarter of 2025, helping offset broader weakness in the automotive sector amid ongoing global trade tensions and economic uncertainty, according to data released by the European Automobile Manufacturers’ Association (ACEA).

Between January and March, EV sales rose by 23.9% year-on-year, totaling 412,997 units across the EU. The battery electric vehicle (BEV) market share edged up slightly to 15.2%, compared to 15% at the start of the year.

Three of the bloc’s four largest auto markets—Germany, Belgium, and the Netherlands—led the electric surge. Germany posted a significant 38.9% jump in EV sales, while Belgium saw a 29.9% rise and the Netherlands recorded a 7.9% increase. France, however, bucked the trend with a 6.6% decline in EV sales.

Hybrid-electric vehicles (HEVs) also performed strongly, with sales increasing by 20.7% to reach 964,108 units in the first quarter. France led this segment with a 47.5% spike in registrations, while Spain, Italy, and Germany also reported double-digit growth. HEVs now represent 35.5% of the EU’s car market.

Plug-in hybrid electric vehicles (PHEVs) saw modest growth of 1.1%, buoyed primarily by rising demand in Germany and Spain.

Despite the green energy gains, the overall EU car market experienced a slight setback. New car registrations across the EU declined by 1.9% year-on-year in Q1, with March showing a marginal 0.2% dip. ACEA attributed the slowdown to ongoing global economic pressures and trade-related disruptions affecting supply chains and market confidence.

Traditional fuel segments continued their downward trajectory. Petrol car registrations dropped 20.6% compared to the same period in 2024, with France experiencing the steepest decline at 34.1%. Diesel vehicle registrations plummeted 27.1% across the EU.

Among automakers, Volkswagen Group recorded a 4.8% increase in EU registrations, buoyed by strong demand for its Cupra models. Renault Group also performed well, with a 9.5% rise in registrations. Meanwhile, BMW posted marginal growth of 0.4%, while Mercedes-Benz and Stellantis saw declines of 6.2% and 14%, respectively.

China’s SAIC Motor emerged as a major winner, posting a 52.3% jump in registrations—reflecting growing consumer interest in Chinese EV brands. In contrast, Tesla saw EU registrations plunge by 45% in the first quarter, marking a significant setback for the U.S. electric carmaker in the European market.

Despite the mixed results, the surge in EV and hybrid sales highlights a clear shift in consumer preferences and signals a pivotal moment for Europe’s car industry as it accelerates toward electrification.

Elon Musk has announced he will reduce his involvement in government-related work and shift his attention back to Tesla, after the electric vehicle giant reported a sharp fall in profits and revenue for the first quarter of the year.

Speaking to analysts on a conference call Tuesday, Musk said he plans to spend “far more” time on Tesla starting in May, now that the initial phase of work on the Department of Government Efficiency (DOGE) is complete. “I’ll be allocating just a day or two per week to government matters,” Musk said, following months of public scrutiny over his role in the controversial agency.

Tesla’s financial results reflected the challenges Musk now faces. The company posted a 71% drop in profits, with net income falling from $1.4 billion to $409 million. Revenue declined 9% to $19.3 billion, missing Wall Street expectations. Tesla shares, which are down over 40% this year, rose more than 5% in after-hours trading following Musk’s remarks.

“Investors wanted to see him recommit to Tesla,” said Dan Ives, senior equity analyst at Wedbush Securities. “This is a big step in the right direction.”

Autonomous Future Still the Focus

Despite the weak earnings, Tesla reaffirmed ambitious plans for autonomous driving. The company confirmed it will launch a budget version of its Model Y SUV in the coming months and aims to begin a commercial robotaxi service in Austin by June. Musk claimed “millions of Teslas” could be operating autonomously by year-end.

“Can you go to sleep in our cars and wake up at your destination? I’m confident that will be available in many U.S. cities by the end of this year,” he said.

However, industry experts remain skeptical. “The system is not robust enough to operate unsupervised,” said Sam Abuelsamid, an analyst at Telemetry Insight. “It still makes far too many errors.”

U.S. regulators are also watching closely. Tesla’s Autopilot system and “Full Self-Driving” software are both under investigation by the National Highway Traffic Safety Administration over safety concerns.

Rising Global Pressure and Tariff Concerns

Tesla is also contending with fierce competition from Chinese automakers like BYD and growing backlash in Europe, where Musk’s political statements have alienated potential buyers. At home, new tariffs introduced by the Trump administration could affect Tesla’s supply chain and energy storage business, though the company emphasized its mostly domestic manufacturing footprint as a buffer.

Tesla has also halted orders for two models in mainland China amid trade tensions. Nonetheless, it saw a boost from regulatory credit sales, which brought in $595 million for the quarter—up from $442 million a year ago. Positive free cash flow of $2.2 billion provided one bright spot in an otherwise turbulent period.

Looking ahead, Tesla will need to deliver on its autonomy promises and win back market share in a rapidly evolving EV landscape.

Economic activity in the eurozone came to a near standstill in April as heightened trade tensions and uncertainty weighed heavily on the services sector, according to newly released data from S&P Global’s Purchasing Managers’ Index (PMI).

The Composite PMI for the 20-nation bloc dropped to 50.1 in April from 50.9 in March, barely remaining above the 50-point threshold that separates growth from contraction. The decline reflects mounting concerns over global trade, particularly fresh tariffs introduced by the United States, and fragile consumer confidence within Europe.

A deeper look into the data reveals a widening gap between sectors. The services PMI fell into contraction territory for the first time in five months, slipping to 49.7 from 51 in March. Meanwhile, the manufacturing sector showed modest improvement, rising to 48.7 from 46.1—surpassing expectations and suggesting some resilience among producers.

Across the eurozone, business confidence dipped sharply, with survey respondents voicing growing concerns over tariffs, the broader economic outlook, and delays in customer decision-making. Sentiment is now at its lowest since November 2022.

Germany’s Manufacturing Holds Ground Amid Services Slump

In Germany, the bloc’s largest economy, the Composite PMI fell to 49.7 from 51.3 in March, with the services sector suffering the most. The German Services PMI dropped to 48.8, reflecting client caution and trade-related uncertainty.

However, manufacturing showed signs of stabilization, aided by falling energy costs and a rare rise in export orders. “Most manufacturers are weathering the new tariffs better than expected,” said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “Production increased for the second consecutive month, indicating cautious momentum.”

France’s Downturn Deepens

In contrast, France’s economy continued its downward slide, with the Composite PMI falling to 47.3 in April from 48 in March. The services sector led the decline with a reading of 46.8, while manufacturing showed only minor improvement at 48.2.

“Demand, especially domestically, is weakening,” said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank. “The service sector is under considerable strain, and companies have responded by cutting staff.”

Feldhusen added that political instability and fiscal challenges are compounding France’s economic struggles, warning of ongoing pressure in the months ahead.

Inflation Slows, Supporting ECB Policy Shift

Despite the economic headwinds, inflation data offered some encouragement for the European Central Bank. Input costs rose at their slowest pace since November 2024, and output price inflation eased to a five-month low. Analysts believe this could strengthen the ECB’s case for further rate cuts, with some expecting up to three more reductions in 2025.

“With inflation pressures cooling, there’s more room for policy easing,” said de la Rubia. “We may see more targeted fiscal expansion, especially in areas like defense and infrastructure, which could help lift both manufacturing and services later in the year.”

The April data underscores the eurozone’s fragile recovery path, with analysts urging close monitoring of trade developments and domestic fiscal measures.