Electric cars could reach a market share of as much as 24% in Europe next year as carmakers start to release cheaper models to turn around the slump in electric vehicle (EV) demand, according to the Transport & Environment (T&E) lobby group.

There is a “glut of new, more affordable models” coming, said Lucien Mathieu, cars director at T&E. In a report released on Tuesday, the group said it expects “rapid growth” of EV sales, citing its own analysis of first-half auto sales and forecasts. 

A market share of above 20% would be a significant jump from this year. From January to July, fully electric vehicles have made up 12.5% of all new car registrations in the European Union (EU), according to the European Automobile Manufacturers’ Association.

Europe’s auto industry is struggling to weather a steep downturn in EV demand after governments reduced incentives and Chinese carmakers started to expand in the region. Volkswagen AG is weighing factory closures in Germany for the first time in its history, while France’s Renault SA has warned that carmakers will incur billions in fines if they don’t meet ambitious EU climate goals.

According to T&E, manufacturers should forge ahead with EV plans, which include seven new electric models under €25,000 coming to market this year and next. The Renault 5 and Stellantis NV’s Citroën e-C3 are among those that will help bridge the gap with stricter 2025 EU emissions, the report said. 

While T&E is bullish on future EV growth, workers at plants running below capacity are feeling the pain. Thousands of them brought chaos to Brussels on Monday in a demonstration to show solidarity with employees from an Audi car factory facing possible closure. In northern Italy, production at Stellantis’ Mirafiori plant slumped 63% in the first half due to tepid demand for the electric Fiat 500.

T&E called on EU and national lawmakers to do more to support EV demand with policies such as corporate fleet targets, charging infrastructure and social leasing programmes. Meanwhile, automakers struggling with EV targets next year will be able to “pool” with other manufacturers to cut their average emissions further, the T&E added. 

For now, Europe’s manufacturers remain divided over the looming C02 emissions rules. The European Automobile Manufacturers’ Association hasn’t yet taken a formal position on the matter.

  - Bloomberg