More incentives to 'accelerate' mobility 'plugged-in' to electric cars

Registration of electric vehicles saw a 45.1% increase between January and March in Spain. But from the e-mobility sector, updating assistance programs for their acquisition is needed at a time when geopolitical factors, tariff escalation, and Europe's expected double leap towards higher levels of productivity and competitiveness require protecting a crucial productive segment to certify energy neutrality in the Old Continent

By Ignacio J. Domingo

The electric vehicle fleet (100% electric and plug-in hybrid vehicles, including passenger cars and two-wheelers, as well as commercial or industrial vehicles) is progressing well. Based on registrations —the indicator that precisely measures evolution— it is safe to say that the pace has accelerated significantly. In fact, the sales leap in the first quarter of this year has been remarkable, at 45.1%, totaling 44,903 units.

The data comes from two business associations, the Business Association for the Development and Promotion of Electric Mobility (AEDIVE) and the National Association of Vehicle Suppliers (GANVAM), which also highlight that, in March, with one more business day than in the same month last year, there was an increase of 62.7%, which quantitatively translates to 18,303 new electric vehicles in circulation.

However, these same organizations have warned that the dynamics of the first part of the current year could falter, for several reasons. Although essentially, it was thanks to the driving force generated by early purchase decisions of electric vehicles during the last part of 2024, which resulted in a strong surge of registrations between January and March due to doubts about the possible suspension of the MOVES Plan extension. However, despite the delay in the extension of this official assistance, the Government reactivated it retroactively until the end of this year.

The AEDIVE and GANVAM directives insist that it would be appropriate to give the green light to new demand stimuli that would boost the competitive pace of the market, aligning them with them the goals of the National Integrated Energy and Climate Plan (PNIEC), which has set the goal of reaching 5.5 million electric vehicles by 2030.

An electrified future of economic prosperity

To validate its strategic goal, Spain should multiply by seven the average annual registration volume of electric vehicles.

But the AEDIVE directive goes further. In a recent report, it justifies its claim that assistance for this productive segment should be reactivated not only due to an increase in the electric powered fleet, but also because it would create a business, the mobility industry, that would contribute an additional €11 billion to the GDP.

In their calculations, their experts include the €60 billion forecasted in the National Integrated Energy and Climate Plan (PNIEC) for the electrification of the Spanish market, and offer an encouraging forecast: the mobility industry would drive a 1.94% annual increase in GDP over the next five years. Although they do not hide the fact that they face a major challenge.

This includes intensive efforts to develop a sustainable mobility strategy that will serve as the driving force behind technological, industrial and green dynamization in the European internal market. A big challenge. Among other reasons, this is because the sustainable mobility strategy requires constant levers for technological, industrial and green dynamization, demanding the alignment of national initiatives, resources and programs with the legislative and operational developments and changes of the European Green Agenda, with the goal of reaching 5.5 million EV registrations by 2030 in the fourth euro economy.

Europe needs competitiveness guardrails

However, like any strategic challenge, the roadmap for its deployment requires official guardrails for protection, like any economic paradigm shift of note. On the one hand, there is the challenge to promote renewable energies, the channeling of “critical' investments” in green industrial reconversion, the strengthening of value chains, or the promotion of wealth and employment-generating mobility sectors. And, on the other hand, encouraging the propensity to choose an electric car.

Registrations of new cars in Europe increased by 0.9%, reaching 13 million units compared to the previous year, following an upturn in December, according to the European Automobile Manufacturers Association (ACEA). Meanwhile, sales of all-electric vehicles fell by 1.3% after the removal of subsidies in member countries such as Germany, reducing their market share to 15%.

European car brands are preparing to navigate a tumultuous 2025 with the tariff increase on the sector decreed by the Trump administration, strict emissions criteria, and a decline in demand, after experiencing a decrease in sales in China in 2024, the largest electric vehicle market in the world. All of this has created a "perfect storm," according to UBS.

Patrick Hummel writes in one of his investor notes that the return of fiscal stimuli to Europe is a "sensible" vindication of the sector. “Plug-in hybrid sales are becoming increasingly intense due to consumer desire to combine battery power with combustion for greater autonomy,” analysts explain. This is a practice that also extends to the US.

Meanwhile, the attractiveness of the Chinese electric vehicle is increasing, due to the combination of high quality and low prices in Western markets, although its competitiveness also comes from Southeast Asia. Countries such as Thailand, Indonesia, and Vietnam have been promoting their production and consumption of electric vehicles. The EV 3.0 program in Thailand, introduced in 2022, subsidizes purchases with direct assistance worth 150,000 bats (4,500 dollars) per car with tax benefits, while Indonesia has encouraged investments in its automotive and mining companies for critical mineral extraction essential for battery manufacturing. And Vietnam has made a firm commitment to VinFast, the leader in the industry of the sector.

A roadmap marked by resilience

At S&P Global Mobility, they admit that in this exercise the automotive industry will be influenced by "a complex interaction of challenges and opportunities" that will require their companies to have "a resilient and innovative roadmap". According to their experts, possible disruptions in value and supply chains, labor shortages and compliance issues make up the list of concerns, while the continuous drive towards electric mobility, connected vehicles, and autonomous driving technologies are their immediate challenges.

"Suppliers that prioritize resilience, agility, and innovation, while also investing in workforce development and sustainability, are likely to become leaders in the next phase of the automotive revolution," S&P Global states. For this purpose, it is essential to promote "strategic alliances and adopt technological advances to position their logistics capacity with a greater chance of success in each market" and thus achieve more dynamic and competitive sales catalogs.

AEDIVE expresses similar sentiments when evaluating the Spanish quinquennium until 2030, as the electrification of its economy would make the fourth largest economy in the eurozone, a more competitive production model with more stable energy prices, more sustainable by making green investments profitable; and more industrial by promoting emerging manufacturing industries with high added value, productivity, and strong job creation potential.

This is a crucial moment for Europe to jump aboard the competitiveness recovery train led by the US and China, as stated in the Draghi report. In the field of electric cars, this is justified by the International Energy Agency (IEA) whose experts assure that China, the US and Europe accounted for 95% of EV sales worldwide in 2023 and 2024. Last year there were 17.1 million new electric vehicles in circulation.

One of the initiatives that best stimulates the acquisition of EVs in the world and, of course, in Spain, is the spread of Low Emission Zones (LEZs), which promote the Law for Climate Change and are increasing in the country's major capitals, but are still pending in some cities with more than 50,000 inhabitants.

In 2025, these areas that require municipal permits will take a crucial step towards more sustainable mobility. Although initial restrictions may be challenging, these areas will become a key tool in improving air quality in Spain, according to associations such as Somos Eléctricos.

Ignacio J. Domingo has spent most of his 30 years of professional practice analyzing geopolitical, international economic and capital market issues in Expansión and collaborating with media channels such as El Confidencial, Capital, Estrategias de Inversión and El Diario.es, among others. He received the award as a first runner-up for the Citigroup Award, which recognizes the best annual economic reporting.