- No. 22 | 17th June 2024
Market Report
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Stalling BEV market share and political shifts put the EU’s ICE vehicle ban at risk
The EU currently plans to ban the sales of ICE vehicles in 2035. The European Green Party and Renew Europe – two leftist parties and the most vocal party groups on climate issues – are staunchly in favour of the ICE ban, in addition to the central-left Socialists and Democrats. The European People’s Party (EPP), the European Parliament’s largest party, previously campaigned against the ban and is divided on the issue. The German parties within the EPP, the Christian Democratic Union (CDU) and the Christian Social Union (CSU), favour removing the ban, but this was not included in the EPP manifesto.
A shift to the right in the European Parliament may change the dialogue on green targets. The European Green Party and Renew Europe lost almost 40 seats in the European Parliamentary Election. These seats were largely replaced by representatives of populist or right-wing political groups, including Identity and Democracy, and European Conservatives and Reformists. Most centrist and right-wing parties campaigned on repealing or postponing the ban. The European Commission is due to review the ban in 2026 which would provide an opportunity to modify the target.
BEV sales may fail to align with headline climate targets as the growth in the share of BEVs sold in the EU has stalled. With the removal of subsidies the market share of BEVs sold in the first four months of the year was 11.8% in Germany, just below the 12.0% for the EU as a whole. Progress towards higher sales of BEVs varies geographically, with sales in wealthier Northern and Western European economies significantly outpacing those of their Eastern and Southern European peers. In 2023, 14 out of the 27 EU Member States had a BEV sales share below 10%. These are mostly concentrated in Southern and Eastern Europe and include Italy and Spain, the third and fourth largest auto markets in the EU. These countries had a combined 37% market share of total EU vehicle sales in 2023. It is questionable whether these countries can catch up to Germany’s sales share let alone reach 100% BEV sales in a little more than 10 years.
A slower transition would sustain PGM demand from ICE vehicles over the longer term. Based on the current policy, PGM demand is forecast to shrink rapidly as 2035 approaches but a target readjustment would delay the decline of PGM demand in autocatalysts. Western Europe currently has stringent emissions standards and used 2.26 moz of PGMs on autocatalysts in 2023, representing 18% of global autocatalyst demand. In 2030, with the current policy these numbers are forecast to be 1.19 moz and 11%, respectively.
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