Electromobility presents car manufacturers with various challenges and decisions critical to their success. Electric cars are no longer merely an alternative or a distant future concept; they are becoming a standard in the automotive industry. But what does the data say? And what must car companies focus on if they want to succeed in the new market?
Driving the Future: An In-Depth Analysis of Key Factors Shaping the Electric Car Market
At FLO, we help companies transform their businesses to stay relevant in the digital age. We believe the key to success is understanding the customer experience and digitising processes and tools. Unlike many other industries, the automotive industry's shift to electricity is already underway. Nevertheless, we see that each car manufacturer approaches it a little differently.
We've analysed the available data and developed a report outlining the current market landscape and a clear framework. It focuses on five areas that car manufacturers must master to be competitive in the ever-expanding electric car market.
For simplicity, we based our analysis on data from the markets with the most significant number of cars sold (combustion, hybrid and electric), which together account for more than 76% of sales: USA (12.3 million new vehicles, 17%), EU (10.5 million new cars, 14.6%), China (22.3 million new vehicles, 30.8%), Brazil (1.7 million new cars, 9.2%), India (4.2 million new cars, 5 .8%) and Japan (4 million new cars, 5.5%). Data from other countries are either not available or have a minority share of car sales – but we expect them to grow over the next five years and make their way into the subsequent analysis as well.
Go-to-market Framework: Key Success Factors in 2025
Data shows that, from the perspective of customers, the key motivations for purchasing an electric vehicle are clear. The most important motivators for buying an electric car include its environmental impact (current owners and buyers considering electric cars cite ecological impact as a primary motivation), cost savings on fuel and maintenance (consumers claim that the vehicles have a better range/fuel price ratio and require less maintenance) and, of course, government incentives (more than a third of existing electric car owners in Europe say that a subsidy or tax break was a significant motivation for the purchase).
The most significant barriers to purchasing an electric vehicle include the high initial cost, with potential buyers noting that EVs are often pricier than their internal combustion counterparts, the availability of charging stations, and the limited range.
5 Critical Elements for Electric Car Market Leadership: Go-to-market Framework for Original Equipment Manufacturers
We have combined data on sales, supply and policy in individual markets, and the driving force that will determine the direction of the entire electric car market, in our opinion, will be the automakers focusing their attention on these five main principles:
1. Government incentives, support and regulation
The current market situation clearly shows that government incentives and regulations are among the most important driving forces for the development of electric cars. Countries such as China and Norway are experiencing massive growth in EV sales thanks to aggressive government subsidies that make purchasing and operating an electric vehicle significantly cheaper. In 2023, more than 50% of electric cars will come from China, confirming how government subsidies and support massively influence the market.
If car companies want to sell more electric cars, they have several options to support sales: lower prices, build their infrastructure, or perhaps lobby for regulations and incentives. However, it is still true that their main business is combustion engines, so they need to find a suitable balance. An essential factor is that European car companies pay fines for the small number of electric models in the range and the small share of electric cars sold in the entire portfolio.
Automobile manufacturers must monitor and adapt to these incentives, which affect not only demand but also the total cost of ownership. At the same time, the car industry lobby must be able to negotiate terms that will support the sale of its products.
2. Cost vs. Total Cost of Ownership (TCO)
Although electric cars are often more expensive to purchase than cars with internal combustion engines, their total operating costs (TCO - Total Cost of Ownership) can be significantly lower. Long-term EV ownership is becoming increasingly profitable due to lower fuel and maintenance costs. According to IEA data, the average price of EVs in China is already lower than that of classic cars, creating a crucial tipping point for their mass-market expansion.
Automakers need to highlight the cost-of-ownership benefits of EVs.
3. Ecology as a customer preference
According to Kantar research, more and more customers are seeing electric cars as a way to reduce their carbon footprint. Environmental impact is becoming one of the primary motivators for buying electric cars. As with other factors, ecology varies according to countries and the age of the target customer group. Ecology plays a more important role in the decision-making of customers from European countries and the United States. On the contrary, customers in Asian countries mentioned this factor second only to economic reasons for purchasing an electric car. The exception among Asian countries is Singapore, where 41% of customers cited ecology as a key factor for buying an electric car, even 42% in Generation Z.
Automakers must effectively communicate the environmental benefits of their vehicles.
4. Charging infrastructure = major blocker
The construction of charging infrastructure is one of the most significant factors that will affect sales of electric cars. There is a strong correlation between the number of publicly available charging stations and EV sales. ACEA estimates that around 8.8 million public charging stations will be needed in Europe by 2030 – a considerable number, given the fact that there were only 632,423 in operation across the EU at the end of 2023. opened and still open: while there have been 18 times more electric cars on the road in the last seven years, the number of public chargers has increased only six times.
Automakers must effectively communicate the environmental benefits of their vehicles.
5. Models & adaptation of supply to demand
According to the IEA, there are approximately 600 electric car models currently available on the market, with two-thirds being large cars and SUVs. The supply trends over the years show that demand for larger vehicles continues to dominate. However, this trend poses challenges, particularly for battery technology.
Automakers must ensure their product offerings align with the high demand for larger vehicles, which is crucial in many regions.
The State of the Electric Car Market
What data supports our conclusions? Let’s dive in: Global car sales were flat in 2022 due to lingering post-COVID supply chain issues. However, 2023 saw a turnaround. These problems were resolved, and sales began to increase. According to the IEA, global car sales grew by almost 10%, reaching over 72 million units.
Today, the United States, the EU trade area and China account for 62.6% of the global car market, and their growth rates outpace the global average.
New Car Registrations in 2023: Global Market Share vs. Annual Growth Rate.
Despite local media reports, the global electric vehicle market is rapidly growing. According to ACEA, in 2023, total sales of electric vehicles (battery and plug-in hybrids) increased by 36%, reaching 14 million units.
This surge is driven by three primary markets: China, the EU, and the US. These three regions combined account for over 95% of the global EV market.
China leads the market with a 36.3% share and 35% annual growth in 2023, followed by Europe, which holds more than 30% of the market. Preliminary data suggest Europe will maintain this position in 2024.
The Race to Lead the EV Market: How the U.S., EU, and China Compare
Despite the rise in electric car sales, growth in the US lags behind China and Europe, with the US market share reaching 1.6% in 2023. The variance across regions is due to government incentives, charging infrastructure availability, and consumer preferences.
Electromobility & Europe
The European market is the second-largest electric car market, behind China. In 2023, electric vehicles comprised approximately 20.8% of total car sales in the EU, EFTA, and the UK. While EVs account for only 5.2% of the European vehicle fleet, according to Statista data, their market share continues to grow, driven by strict climate policies, government incentives, and an expanding range of models.
Germany, the UK, and France represent the most prominent European markets, while countries like Norway and the Netherlands boast even higher penetration.
EV Adoption in Europe: A Regional Breakdown of Electric Vehicle Penetration and Market Share
Norway is unique, with electric cars accounting for over 90% of its market in 2023. This achievement results from a robust government intervention, primarily through negative incentives that disadvantage internal combustion vehicles. High road taxes, city entry fees, and parking permits for non-electric cars helped accelerate EV adoption.
Overall, sales of electric vehicles in Europe are expected to continue growing. The IEA predicts that electric cars will account for almost 30% of all sales by 2024.
Eastern Europe? A Different Story
Although electric car sales have risen in Central and Eastern Europe (CEE), the region still lags behind Western Europe. In 2023, EVs represented only 0.2% to 0.65% of the total vehicle fleet in these countries.
Europe's EV Adoption Rates: A Country-by-Country Breakdown
The region experienced the most rapid growth in battery electric vehicle (BEV) sales. Greece led the way with a 125.6% year-on-year increase in BEV sales in 2023, followed by Bulgaria and Estonia.
Fastest-growing (BEV) | BEV Sales in 2023 | Growth (YoY) |
---|---|---|
Fastest-growing (BEV) Greece | BEV Sales in 2023 6 379 | Growth (YoY) 125.6% |
Fastest-growing (BEV) Bulgaria | BEV Sales in 2023 1 816 | Growth (YoY) 119.3% |
Fastest-growing (BEV) Estonia | BEV Sales in 2023 1 445 | Growth (YoY) 110.3% |
Fastest-growing (BEV) Slovenia | BEV Sales in 2023 4 330 | Growth (YoY) 88.8% |
Fastest-growing (BEV) Czechia | BEV Sales in 2023 6 700 | Growth (YoY) 69.9% |
How is that possible? Greece became the fastest-growing EV market in Europe, mainly due to a significant increase in incentives introduced over the past year. The government heavily invested in financial incentives, benefiting consumers and car manufacturers.
In contrast, countries like Hungary and Croatia saw much slower growth. Across the region, government or EU incentives remain a critical factor in driving EV adoption, but each country faces unique challenges, particularly in developing charging infrastructure.
Slowest-growing (BEV) | BEV Sales in 2023 | Growth (YoY) |
---|---|---|
Slowest-growing (BEV) Croatia | BEV Sales in 2023 1 637 | Growth (YoY) 19.6% |
Slowest-growing (BEV) Hungary | BEV Sales in 2023 5 799 | Growth (YoY) 23.1% |
Slowest-growing (BEV) Romania | BEV Sales in 2023 15 368 | Growth (YoY) 32.1% |
Slowest-growing (BEV) Lithuania | BEV Sales in 2023 2 060 | Growth (YoY) 52.6% |
Slowest-growing (BEV) Latvia | BEV Sales in 2023 1 692 | Growth (YoY) 57.7% |
Romania’s high absolute number of EV sales contrasts with its slow growth rate. Despite registering 15,368 electric vehicles in 2023, Romania remains below the EU average regarding new car registrations per capita.
The number of newly registered electric cars in Romania is significantly higher than in countries with similar annual growth rates.
However, due to Romania's large population, the country remains below the EU average in internal combustion and electric vehicle sales. According to ACEA's 2023 data, only Bulgaria has fewer new vehicle registrations per thousand inhabitants in the EU.
As a result, the slow annual growth in electric car sales can largely be attributed to Romania's overall low demand for new vehicles.
EV Framework Application: CEE and Eastern Europe Markets
Who Will Lead the EV Market?
The development of the secondary market for electric cars will also play a crucial role in the coming years. Global sales of used electric vehicles reached 1.4 million units in 2023 and are expected to grow by another 25% in 2024. The secondary market will become a key segment in the EV industry.
Success in the electric vehicle market depends on strategic alignment in five key areas: leveraging government incentives, optimising total cost of ownership, communicating environmental benefits, expanding charging infrastructure, and aligning supply with demand.
Automakers who navigate these areas effectively will have a competitive advantage in the rapidly evolving global EV market.
In preparing this analysis, we relied primarily on data from the following sources:
The European Automobile Manufacturers‘ Association (ACEA)
International Energy Agency (IEA)
S&P Global Mobility
Statista
Kantar
Author:
Michal Majnuš, Head of Consulting
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