Source: PwC. Click to enlarge.

It’s no secret that the internal combustion engine is expected to be the predominant powertrain in the near term, but increased acceptance of AFV technology, particularly pure electrification, should not be ignored. The fact that some European consumers are migrating from hybrids to pure electric indicates a growing comfort level with the state of the technology; a dynamic that will serve OEMs and suppliers well as the AFV market matures in the coming years.

—Rick Hanna, Global Automotive Leader, PwC

In terms of specific countries, Norway leads the way in AFV sales, accounting for 24,855 new vehicle registrations, followed by the UK at 20,966 registrations, a 138% increase through September. Germany, the largest vehicle market in the EU, increased AFV new vehicle registrations by nearly 15,000.

Mild and full hybrids specifically represent the largest share of the EU AFV market, but their growth has slowed compared to pure electric sales. France increased mild and full hybrid sales 35.2% through September, but many countries had decreased sales for these vehicles. The Netherlands saw sales decrease nearly 20%, a shift, in part, due to technology improvements making hybrid plug-ins more accessible.

In 2016, however, PwC forecasts a reduction in plug-in hybrid sales in Europe as many of the current government subsidies are being eliminated. In the UK, for example, the ₤5,000 government (approximately US$7,200) grant created in 2011 will soon reach its limit of 50,000 participants. And, in the Netherlands, the government will end a tax break for alternative-fuel company cars that will increase the tax rate on these vehicles to 25% from its current 7%.

In terms of specific vehicles, while the top-selling AFV was a plug-in hybrid, the remaining four of the top five sellers were EVs. EV production is expected to increase with the introduction of new models such as the VW Polo EV and the Mini EV as well as continued growth of existing models such as the Tesla Model S, the Nissan Leaf, Bollore Bluecar and the VW e-Golf.

What remains a challenge for OEMs in Europe is the ability to introduce AFVs at the lower price points consumers want. Case in point is the Renault Zoe EV, which is comparable to the Renault Clio traditional powertrain. Zoe EVs only sold 11,000 units while the Clio reached nearly 300,000 in sales. This dynamic, however, is reversed in the premium segment where the Tesla S Model was the second-largest selling vehicle in the upper premium segment.