A new Renault Zoe for sale in a vending machine in London. Although a publicity stunt by car mag Auto Trader, it could be the way cars are sold in the future or where autonomous car-sharing EVs are stored. Photo © PEP1/PinPep/Cover Images/Newscom

Vehicle electrification is at the center of European Union’s transport and environmental policy, kept there by growing concerns about climate change and heavy fines for vehicle makers that exceed emissions targets in the major European markets.

The bloc’s lawmakers are expected to focus their attention on zero-emissions vehicles as part of the Green Deal , a raft of legislation aimed at making the continent carbon neutral by 2050. The current fleet average carbon dioxide emissions target is also likely to tighten further, as suggested in European Commission President Ursula von der Leyen’s state of the Union letter in December 2020. The current target is a 55% reduction of CO2 emissions emissions by 2030 over 2021 levels, where previously it had been 37.5%.

Despite the ravages of the pandemic in 2020, EV sales in Europe were up 7% – music to the ears of the bloc’s carmakers as it helps them meet fleet targets of 95 grams per kilometer emanating from their conventional cars.

In addition, Europe is a largely developed market with both high GDP per capita and environmental awareness, setting a good foundation for uptake.

The spectrum of incentives is wide, although only a few European states are without incentives at all. Most offer a combination of taz breaks and purchase incentives. But most have some distance to go before catching up with Norway and the Netherlands in terms of penetration.


Carmakers still need to address high upfront costs, which are admittedly falling slowly, and a limited range of models compared with ICE vehicles or the large number of EVs available in China. Additionally, charging infrastructure and batteries still pose limitations in Europe, according to the EU and the European Automobile Manufacturers’ Associations, but this is also gradually improving. 

“In order to drive this shift to zero- and low-emission [vehicles], governments across the EU need to ramp up investments in charging and refueling infrastructure and to put in place meaningful and sustainable incentives to stimulate sales of alternatively-powered cars in the long run,” said ACEA in a report.

ACEA maintains that the EU is not doing enough to foster the development of a battery charging network. The 27 EU nations plus the United Kingdom had some 250,000 charging points for EVs in 2020 – far short of the 2.8 million chargers required by the number of EVs necessary to meet the EU’s emissions goal. To reach 2.8 million chargers would require an over 10-fold increase over the next 10 years. 

For its part, the EU has made incentives available to its member states to build charging stations. Local, regional and national governments in Europe have passed legislation offering various incentives to encourage the use of EVs. Some of the incentives, according to an EU report, are not limited to passenger vehicles, but also other road vehicles such as vans, buses, bicycles and motorcycles. 


Like the rest of the world, fossil-fueled engines dominate the continent’s roads, but the share of EVs (BEVs, PHEVs and hybrids) grew rapidly in 2020. Plug-ins made up 11.4% of new vehicle registrations in the EU last year, up from 3.6% in 2019.

In 2020, Germans bought the most BEVs and PHEVs by volume – 394,943 vehicles – followed by the usual suspects of France, the U.K., Norway, Sweden and the Netherlands.


EV growth in Europe has in part been driven by European Commission directives, such as the most recent Regulation 2019/631. Among other things, it lays out fines for automakers if they do not meet fleet-wide emissions targets. Zero- and low-emissions vehicles are an ideal solution to their woes, if not those of the lubricants industry, which derives a quarter of its revenue from auto lubes.

Europe’s 2020 emission target is ambitious, perhaps the most ambitious in the world. A car would have to travel more than 24 kilometers per liter to comply with the target of 95 grams of CO2 per kilometer. Many analysts believe car companies are at risk of failing and say it could be the biggest threat in two decades to an industry hurt by global tariff disputes, cross-border supply-chain issues and shrinking demand at home and abroad, according to a Wall Street Journal article.

The European Parliament and the European Council, two of the EU’s governing bodies, adopted the regulation in April 2019 setting out targets for the reduction of carbon dioxide by 37.5% by 2030.

In 2019, European automakers finally swung into gear and announced the launch of scores of new EVs models to market in 2020 to meet the EU’s new target on greenhouse gas emissions, part of an effort to avert up to $37 billion in fines, as long as the new vehicles sell.

“In broader terms, the development of the EV market also depends on the level of ambition of the EU emission regulations; the [government] incentives offered to users of EVs; fuel prices, general travel behavior and advances in research,” an EU report stated.

In 2019, European EV makers finally swung into gear and announced the launch of scores of new EV models to market in 2020 to meet the EU’s new target on greenhouse gas emissions, part of an effort to avert up to $37 billion in fines, as long as the new vehicles sell.

Some governments also passed legislation supporting the purchase of EVs, which varies from country to country. In France, if someone swaps a diesel vehicle for a new EV, they are entitled to upwards of €11,000 in grants from the state. Many countries offer buying grants or substantial discounts to purchasers of two-wheelers, from bicycles to mopeds. 

This has some car industry heads asking governments to lend a hand by increasing incentives for buying new EVs. Experts say there is a slim chance the EU will relent from its targets.

In 2020, it was reported the EU is aiming to have at least 30 million zero-emission vehicles on the road by 2030. The report said there would need to be an estimated 3 million public charging stations and 1,000 hydrogen refueling stations by the target year, as the continent currently has 200,000 charging stations.

Policies by Country

Almost all EU member states, as well as several non-members on the continent, have some kind of EV incentive policy in place, from tax breaks and purchase grants to fee waivers and scrappage schemes. But they vary widely from country to country.

Austria’s government exempts EVs from fuel consumption and pollution tax, ownership tax and company car tax, plus lower VAT on zero-emission cars. Until the end of 2020, there is a bonus for the purchase of cars and vans with a fully electric range of 50 km and a gross market price of €60,000 or less. In 2020, it upped its purchase bonus from €3,000 to €5,000 for BEVs and fuel cell EVs, and €1,250 can be gleaned for plug-in hybrids and extended-range EVs. Austria also provides €600 for home charging stations and €1,800 for charging stations in multi-occupancy buildings.

In Belgium, EVs boast the lowest annual ownership tax (€74 as opposed to €1,900) in all three provinces, and the expense tax deductible for companies is 100% for BEVs and 100% for vehicles emitting less than 42 g/km of CO2.

Those who want to buy an EV in Croatia enjoy exemption from excise duties and environmental taxes for EVs, as well as incentives worth €9,200 for BEVs and €4,600 for PHEVs from a fund worth €5.8 million for commercial and private purchasers. The scheme, which came into effect in July 2020, proved so popular that the online application system crashed after 20 minutes of coming online.

Denmark’s passed a deal at the end of 2020 to secure financing to put at least 775,000 EVs on the road by 2030. Taxes on cars using fossil fuels will gradually increase, while taxes on new cars will scale based on the carbon dioxide they emit. The government will set aside approximately €335 million to fund the deal. Denmark also offers tax reductions on electricity used to power commercial EV charging stations.

At the end of 2019, Estonia’s parliament introduced a bill that gives companies (limited to 15 vehicles) and individuals a grant of up to €5,000 to buy a BEV car or van that costs no more than €50,000, excluding VAT. There are some conditions, though: The vehicle must be driven at least 80,000 kilometers within four years, mostly in Estonia, be bought from an Estonian Vehicle Dealers and Services Association-certified dealer and go at least 60 km per hour.

Until 2021, buyers in Finland get €2,000 per households to buy or lease a BEV worth up to €50,000. These vehicles are taxed at the minimum rate. The Finnish government also provides subsidies for charging infrastructure: a 35% refund of total purchase and installation cost of commercial charging infrastructure and a 35% refund, up to €90,000, of the purchase and installation for residential charging infrastructure, plus a tax return of €300 for such installations.

France’s bonus-malus system puts a surcharge on vehicles with the highest CO2 emissions, with over €10,000 being charged for the highest-emissions vehicles, thus creating an EV purchase incentive. An EV then earns an “eco-bonus” of up to €5,000, which cannot surpass 27% of the car’s value. There is also a scrappage bonus of up to €2,500 for ICE vehicles. This results in a total of €7,500 of incentives available to private EV buyers.

Last year, French President Emmanuel Macron announced an €8 billion plan to rejuvenate the country’s struggling auto industry. Included in the plan was increased incentives to buy EVs and an ambition to become a leader in zero-emission vehicle manufacturing.

The federal government in Germany temporarily contributes an “innovation bonus” of up to €9,000 to each purchase for BEVs and fuel cell EVs priced up to €40,000, and €7,500 for those priced over €40,000. EVs are also immune from vehicle taxes for up to 10 years.

Another tax bonus is also offered based on the car’s battery size. The list price of the car is discounted by €200 per kilowatt-hour battery capacity, and the discount applied for up to €10,000 in 2019, lessening the list price as well as the amount due for income tax. This total is reduced each year by €50 and is expected to apply until 2022, although extensions may be possible. 

In 2020, the German government passed a bill that will abolish the vehicle tax for EVs by the end of 2030. The bill also supports a transition to electric fleets for German organizations, and wants to increase the demand for electric buses. It also mandated that every gas station in the country include electric charging stations.

Greece’s prime minister proposed a €100 million package of incentives in June 2020 that includes purchase subsidies worth 15% of the cost of a private passenger and light commercial BEV or PHEV up to a limit of €5,500, 20% for a two-wheelers up to €800 and 25% for taxis up to €8,000, as well as road tax exemption and free parking. They are also offering a scrappage bonus of €2,500 and tax-free charging. The benefit for a single car could be as much as €10,000.

As of June 2020, BEVs and PHEV owners in Hungary get €7,350 for EVs with a gross price of up to €32,000 or €1,500 for vehicles with a cost in the range of €32,000 to €44,000. They also pay no registration tax, circulation tax or company car tax.

Iceland’s EV market is going full steam ahead. It is second to Norway in the ratio of EV to ICE vehicle sales in Europe, with 19% of sales. The government exempts plug-in EVs from import duties, which are between zero and 65% depending on the vehicle’s CO2 emission level, and they get free parking in the center of Reykjavik. EVs are also exempt from VAT up to approximately €40,000, with standard rate applied for the remainder of the price.

At 1.5% of all vehicles on the road in 2019, Ireland’s EV fleet is modest, but its ambitions are grand; the country hopes that EVs will make up 10% of the car parc by the end of 2020. The country also hopes to end the sales of cars powered only by fossil fuels by 2030. Privately purchased EVs costing at least €14,000 get a purchase subsidy up to €5,000 and a domestic charging point subsidy of €2,000. They also enjoy the lowest road tax of €120, and companies can write off 100% of the purchase price of EVs and PHEVs.

Italy employs a bonus-malus system in which EV buyers can receive a cash bonus of up to €6,000 for vehicles that emit less than 70 g/kg CO2 and cost less than €50,000.

Liechtenstein offers approximately €2,700 for the purchase of EVs that cost at least €18,279.

EV and fuel-cell cars in Luxembourg get a €5,000 credit on their tax returns as well as the lowest benefit-in-kind tax for company cars. EV owners also pay the lowest annual circulation tax rate.

Malta offers various subsidies: €7,000 for new EVs while scrapping an ICE vehicle at least 10 years old; €6,000 for new EVs without scrapping an ICE vehicle; €2,000 for the purchase of a previously owned EV less than 3 years old and 15,000 kilometers on the odometer without scrapping an ICE vehicle; and 25%, capped at €6,000, off the purchase of an electric quadricycle or motorcycle. Other tax and registration benefits are also provided.

Monaco offers drivers up to $12,600 to buy a BEV or PHEV, which can then park free in public parking spots.

Drivers in the Netherlands enjoy no registration taxes for BEVs, as these taxes are based on CO2 emissions. For drivers of company cars who use their vehicles privately, only 8% of the car’s value is included in that person’s income tax, which beats the rate of 22% for ICE vehicles. The scheme applies to vehicles priced up to €45,000. PHEVs no longer qualify for tax relief.

In Norway, BEVs and fuel-cell vehicles are exempt from import taxes and the 25% value-added tax on motorized vehicles, which is otherwise tacked on to a vehicle’s value after customs and import taxes have been applied. Because of this tax break, the Norwegian market is one of the few globally where there is almost price parity between an EV and ICE vehicle of a comparable size. Other perks are limited use of bus lanes in certain areas, as well as discounts on ferry fees, tolls and parking costs. 

The EU’s 2021-27 budget contains a proposal to spend 60% of the €42.3 billion infrastructure fund on projects that contribute to reversing climate change, such as EV charging infrastructure. The EU is also committed to decarbonizing transport, so European carmakers can expect ever more stringent emissions targets.

In Poland, BEVs and PHEVs up to 2,000 cc are exempt from purchase tax until the end of 2020 and get $10,156 for BEVs worth up to $33,853, and $24,374 for fuel-cell EVs costing up to $81,249 until the end of 2027.

Motorists in Portugal are aided by €3 million in EV purchase subsidies for private citizens worth €3,000 per vehicle, while company EVs are exempt from motor vehicle tax and single road tax. The government is also investing in charging infrastructure.

Romania offer a BEV purchase incentive up to €10,000, €4,250 for a PHEV and an extra €1,250 for scrapping a vehicle more than eight years old. It is the most generous in Europe, if not globally. Electric and hybrid vehicles are exempt from registration tax and an emissions-based tax reduction is also in place.

BEVs in Slovakia are subject to the lowest registration tax rate and no motor vehicle tax, while hybrids and CNG cars get 50% off.

Like Romania, Slovenia is also generous to EV buyers. Its sliding-scale incentive scheme offers €7,500 for BEV cars, €4,500 for vans and heavy quadricycles, €4,500 for PHEV cars, vans and EREVs, and €3,000 for light BEV quadricycles. BEVs also pay the lowest tax rate among vehicles.

Spain earmarked €45 million in purchase grants of €4,000 to €5,000 for BEVs and €1,900 to €2,600 for PHEVs, dependent on whether a vehicle seven years or older is being scrapped. Electric vans and trucks are eligible for grants from €4,400 to €6,000, also dependent on scrapping of older vehicles. There is also no registration tax for BEVs.

Starting mid-2018, Sweden offered a €5,700 bonus on purchases of electric cars, light trucks and buses, but the incentive cannot exceed 25% of the vehicle’s value. The incentive for companies purchasing an eligible vehicle cannot exceed 40% of the difference between the prices of a new EV and a similar ICE vehicle. Bonuses are paid directly to vehicle owners six months after registration, a protocol designed to prevent the vehicle from being sold during that time period. The bonus is decreased by $87 for each gram of CO2 emitted by the car for up to 60 g/km. 

The United Kingdom offers purchase incentives of up to £3,000 for EVs worth up to £50,000, along with an £8,000 incentive on vans and trucks. Plug-in hybrid buyers do not qualify for this incentive but can claim up to £500 toward the cost of a home charging device. In 2020, the private use of company cars enjoyed a minimum tax rate of 0%, which is set to increase to 1% in 2021 and 2% in 2022. EVs are also exempt from London’s daily congestion zone charge of £11.50 and ultra-low emission zone charge of £12.50 until December 2025.

Certain zero- and low-emissions vehicles in Bulgaria, CyprusLatvia, Lithuania, Switzerland and Turkey are variously exempt from or have reduced duties, fees and road taxes. None has purchase incentives, per se.