Insights

A challenging start to the year for the EU’s new-car market was tempered in February. However, a return to growth was offset by a wider slowdown. So, which countries and powertrains enjoyed growth? Autovista24 web editor James Roberts investigates the latest data. In February, the EU’s new-car market returned to growth. According to ACEA, a total of 865,437 new passenger cars were registered. This equated to a volume rise of 1.4%, following on from January’s 3.9% decline. Two months into 2026, the EU new-car market fell by 1.2% overall. A total of 1,664,680 new units were registered across member states. Regional new-car market growth In total, 20 nations witnessed new-car market growth in February. Of the big four EU markets, Italy enjoyed the most significant improvement at 14%. This was underpinned by a significant electric vehicle (EV) volume increase, including battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). The latent impact of 2025’s incentives played a sizeable part in this trend. Spain’s new-car demand continued to prove positive, albeit slightly muted compared with previous months. Buoyed by continued strong EV demand, overall volumes increased by 7.5% year on year. Meanwhile, the bloc’s largest market, Germany, returned a solid 3.8% market growth in February. France continued a distinctly negative trend. Despite relatively strong increases in BEV deliveries, registrations fell across hybrid, petrol and diesel variants. This dragged the market to a sizeable 14.7% decline. Poland continued its EV-driven trend of prosperity. The EU’s fifth-largest market enjoyed a 6% upswing. In percentage terms, Estonia has rebounded from significant declines in 2025 to an 82.4% lift in its new-car market fortunes. This meant 1,138 new cars were delivered in February. Other notable slumps occurred in the Netherlands, which witnessed a 19% dive in new-car deliveries. This was triggered by a double-digit drop in petrol and BEV figures, as hybrid registrations also dipped. However, this can be skewed by the country’s relatively large company car market. Neighbouring Belgium saw deliveries fall across all powertrains except petrol. This resulted in a 7.7% year-on-year slide as the country’s market continued to decline. PHEVs proving popular in EV push Total new EV registrations, combining BEV and PHEV volumes, amounted to 242,052 in February. This ensured a 28% share of the overall EU market, up 5.2 percentage points (pp), according to Autovista24 calculations. BEV registrations in the EU increased by 20.6% with 158,280 units leaving dealerships in the month. In total, 22 nations saw all-electric registration increases. This resulted in all-electric cars accounting for 18.3% of all new-car deliveries in the EU, an increase of 2.9pp year on year. Meanwhile, PHEVs accounted for 9.7% of the overall EU new-car market. This was enabled by a sizeable 32.1% volume increase compared with February 2025. ACEA stated that the powertrain’s popularity underlines ‘the importance of a technology-neutral pathway to decarbonisation.’ In some of the EU’s largest markets, PHEV demand helped boost overall plug-in totals. Italy led the way in February with triple-digit PHEV increases amounting to 101.7%. This was coupled with a healthy 81.3% surge in year-on-year BEV demand. This trend was echoed in Spain. Amid a new national incentive framework, PHEV popularity increased 75.2%, while BEVs improved by 45.4%. However, local industry bodies exercised caution when considering the longer-term impact as new legislation takes shape. New purchase incentives in Germany seemingly boosted the overall market in February. The EU’s bellwether market saw BEV and PHEV volumes grow by 28.7% and 24.5% respectively. EV uptake in France exposed the nation’s wider new-car market contradictions. Despite a 27.8% increase in BEV volumes and a 3.2% lift for PHEVs, the wider market fell thanks to lower internal-combustion engine (ICE) deliveries. Denmark’s new-car market BEV boost February saw Denmark consolidate its position as an EU BEV market leader. The country saw 9,736 new BEVs take to the country’s roads, according to ACEA. Conversely, its PHEV volumes declined by 60.9%. Hybrids, made up of mild and full-hybrid powertrains, took at 19.8% tumble, and petrol plummeted by 72%. Despite this, the overall new-car market grew by 2.8%, suggesting that, unlike other markets, BEV growth can support wider market prosperity. Poland continued to return impressive EV numbers in February. BEV volumes increased 12.9% year on year, while PHEVs improved by 90.3%. The country’s NaszEauto incentives programme has boosted registrations since 2024. The sustained growth of the sector explains the relatively low double-digit year-on-year increases in February, after triple-digit monthly trends. Despite being a smaller EU new-car market, Croatia recorded notable EV growth in February. The country’s BEV sector witnessed a 217.7% surge, while PHEV popularity increased 140%. Overall, the country saw year-on-year gains of 14.7% with 4,869 units registered. EU hybrid hegemony continues in February In the month, 334,791 new hybrid vehicles took to the EU’s roads. This marked a 10.1% year-on-year upswing, plus a dominant 38.7% market share, up 3pp. Adding hybrid volumes to BEV and PHEV registrations provided a total electrified vehicle figure of 576,843 passenger cars. This secured 66.7% of the EU new-car market in February, an increase of 8.2pp Germany, Italy and Spain all saw hybrid delivery growth in February. Most notable was Italy, where 81,799 new passenger cars underpinned a year-on-year uplift of 33.9%. In the year to date, Italy boasts the highest number of new hybrid registrations at 156,215 units. In France, a lacklustre month for hybrids added to overall new-car market volume woes. Despite the EV volume rise, the nation’s hybrid market contracted by 7.2% with 57,670 deliveries. Aligned with significant falls in ICE uptake, this is harming overall growth. ICE versus EVs In February, total new ICE registrations, combining petrol and diesel models, reached 270,276 units. This continued a trend of decline with a volume drop of 16.6%. Accordingly, a year-on-year market share fall of 6.8pp to 31.2% followed. Two months into 2026, the overall petrol and diesel market share stood at 30.6%. This was 1.9pp above the EV share. At the end of January, the gap was just 1pp, suggesting the electric market will have to push hard to overtake ICE this year. In February, petrol remained a resilient new-car choice. The fuel type held on to a 23.1% market share, albeit down 5.4pp. This was despite a sizeable 17.9% volume decline. This was still the second-best-selling powertrain in the EU, with 199,910 deliveries. In total, 10 nations saw year-on-year increases in new petrol car registrations. Meanwhile, new diesel registrations in February amounted to 70,366 passenger cars across the EU. This signalled a 12.8% fall, securing an 8.1% market share, down 1.3pp. The fuel type saw year-on-year declines in all but 11 member states.

The UK budget included a pay-per-mile tax for electric vehicles (EVs). But how will this work, and what are the potential costs involved? Autovista24 special content editor Phil Curry analyses the data. A new pay-per-mile scheme for EVs is to be introduced in the UK from 2028. The latest budget announcement confirmed that both battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) are to be subject to this tax. For BEVs, this rate will start at 3p per mile. For PHEVs, a discounted rate of 1.5p will be introduced. This must be paid for every mile covered by the vehicle, alongside petrol or diesel. The Electric Vehicle Excise Duty (eVED) will see drivers pay for their mileage alongside their existing Vehicle Excise Duty (VED). The pay-per-mile rates will be kept in line with inflation from 2029 onwards. Alongside the annual £195 VED requirement after the first year of registration, BEV drivers travelling an average of 7,000 miles a year would pay £405 a year in tax. A consultation has been published to gain opinions on how the system will work. It states that drivers will estimate their annual mileage and pay for the year ahead or spread the cost monthly. At the end of the year, actual mileage can be submitted, at which point a ‘reconciliation’ will be required. ‘In moves to update the tax system for a modern-day economy the government is introducing a new per-mile levy for electric and plug-in hybrid cars, coming in 2028. All cars contribute to wear and tear on our roads, so it is only right that our motoring taxes cover EVs via a modest per-mile levy, with extra support to keep EV ownership attractive,’ the government announced. How to pay the mileage charge The eVED scheme will require drivers to input their annual mileage when renewing their VED. This suggests a change in the way drivers apply for VED. Currently, vehicle owners can opt to pay for a full 12 months, six months, or a monthly fee. Automatic renewal is offered, with payments taken using direct debit. For monthly payments, this continues until cancelled. If EV drivers need to input their mileage at the VED renewal stage, this suggests the rolling-payment scheme may end. Instead, owners will likely need to fill out new forms each year, including current mileage and projected annual mileage. This change has not yet been confirmed but is suggested in the government’s consultation document. Whether this requirement will be rolled out to drivers of all powertrains, or just EV owners, remains to be seen. The costs of pay-per-mile The BEV pay-per-mile tax appears to have been calculated at roughly half the cost per-mile fuel duty for petrol. This currently sits at 53p per litre. The budget stated this will remain frozen until September 2026, when it will rise in line with inflation. Based on an average of 36 miles per gallon (MPG), a petrol car’s per-mile fuel duty costs currently reach 7p. However, diesel vehicles, with an average of 43mpg, achieve a cost per mile of 6p. Hybrids, which have an average of around 59mpg, have a per-mile cost of 4p. Averaging the MPG of the two pure internal-combustion engine (ICE) technologies, the cost per mile sits at 6p. This is double the planned BEV rate. According to the latest car parc data from the SMMT, there were 1,334,108 BEVs on UK roads at the end of 2024. Assuming a yearly average of 7,000 miles, this fleet would raise over £280.16 million via the pay-per-mile tax. This is a small amount compared to the income generated for petrol models. There were 21,041,175 of these cars on the UK roads at the end of 2024. Based on a rate of 7p per mile, this parc would generate £10.31 billion for the UK treasury. This is based on an average distance of 7,000 miles a year per car. For PHEVs, the situation is more complex. Drivers will be paying both fuel duty and pay-per-mile tax. This could see a cost of 7p per mile for a petrol PHEV, including 1.5p for the electric powertrain. Could pay-per-mile reduce fuel duty loss? The pay-per-mile tax has been brought in to help offset any declines in fuel duty that the treasury as electrification continues. The Office for Budget Responsibility (OBR) stated that £1.4 billion would be raised by introducing pay-per-mileage for EVs. However, it also warned that: ‘on the basis of the current policy settings, this only makes up for about one-quarter of the receipts that will be lost from the decline of fuel duty by 2050.’ It appears there is currently little threat of declining fuel duty income to warrant the new tax. This would require a significant reduction in the number of petrol and diesel models in the UK by 2028. In 2024, the UK car parc stood at 36,165,401 units, according to SMMT data. This was a 1.3% rise year on year. Of these, 34,088,155 units were either a petrol, diesel or HEV. This was a 0.3% decline compared to 2023 figures, based on Autovista24 calculations. This decline was driven by a fall in petrol and diesel figures. Combined, ICE-powered passenger cars fell 1.1% compared to 2023 totals. Across all vehicles, fuel duty raised £24.6 billion in revenue in 2024, according to the Office for National Statistics. If pure ICE passenger cars each averaged 7,000 miles, fuel duty would have generated £15.18 billion, Autovista24 calculates. This was down by 0.9%, compared to £15.31 billion in 2023, based on the same criteria. If the pay-per-mile tax were implemented on 2024 car parc figures, BEVs would offset this decline by £16.57 million. While EV sales are increasing, they are not simply replacing petrol, diesel or HEV models. It will be some time before the decline in ICE passenger cars is large enough to see a significant drop in fuel-duty income. The PHEV issue For PHEVs, the situation is more complex. As reporting electric-only mileage will be impractical, the pay-per-mile rate has been reduced to 1.5p. This will be applied to the total mileage travelled in a year, regardless of power used. PHEVs will also be required to continue paying fuel duty when filling up. ‘The government recognises that PHEV driving habits vary and that some motorists will drive more or less than 50% in electric mode. However, alternative options would require motorists to report their exact mileage driven in petrol versus electric mode, which is not considered a practical or proportionate approach,’ the government stated in its consultation document. ‘A reduced rate for PHEVs strikes the right balance between fairness, protecting motorists’ privacy and minimising administrative burdens on motorists,’ it continued. This would mean that for a petrol PHEV, drivers could end up paying 8.5p per mile. Covering 7,000 miles per year, plug-in hybrid owners would pay £595 a year. Of this, just £105 would contribute to electric-only usage. In comparison to a BEV driver paying just £210 for the same distance, the charge seems disproportionate. The PHEV cost is also much higher than the £490 for petrol powertrains after 7,000 miles. The situation could impact the PHEV market, which has been performing well throughout 2025, according to SMMT data. Drivers may not want to spend larger amounts on the powertrain. The bridging technology could see new-car deliveries plummet, with customers moving back to ICE, or switching to HEVs or BEVs. Wrong time for pay-per-mile tax? The introduction of pay-per-mile driving for EVs is another additional tax on BEVs. This year has already seen all-electric models eligible for VED and the Expensive Car Supplement (ECS). The government is pushing for BEV adoption, with the zero-emission vehicle mandate placing strict requirements on carmakers. Yet these taxes, while bringing the technology in line with other powertrains, could put buyers off investing in all-electric models. ‘This new pay-per-mile charge is likely to reduce demand for electric cars as it increases their lifetime cost. To meet the ZEV mandate, manufacturers would therefore need to respond through lowering prices or reducing sales of non-EV vehicles,’ the OBR stated in its report. ‘Overall, as a result of this measure, we estimate there will be around 440,000 fewer electric car sales across the forecast period relative to the pre-budget forecast, with 130,000 of this offset by the expected increase in sales due to other Budget measures,’ it continued. Mike Hawes, SMMT chief executive, commented: ‘Changes to the VED expensive car supplement are welcome, as is the additional £1.3 billion funding for the Electric Car Grant and support for charging infrastructure. These will help, but will not offset the impact of introducing a new electric-Vehicle Excise Duty, the wrong measure at the wrong time. ‘Manufacturers have invested to bring more than 150 EV models to market. However, the pressure to deliver the world’s most ambitious zero emission vehicle sales targets – whilst maintaining industry viability – is intense. With even the OBR warning this new tax will undermine demand, government must work with industry to reduce the cost of compliance and protect the UK’s investment appeal,’ he added. Boosting EV uptake The chancellor did announce an increase in the ECS for BEVs. This only became applicable to the technology in April 2025, with the level set at £40,000. This was the same amount as other powertrains. However, BEVs often cost more than their petrol and diesel counterparts. In this regard, the budget announcement included a new limit of £50,000 for all-electric models. This increase comes into effect in April 2026. Until then, BEVs are still subject to the £40,000 level. This could see buyers considering more expensive models delay their purchases. However, there is an increasing number of more affordable models coming to market. In addition, an extra £1.3 billion of funding will be allocated to the Electric Car Grant. The incentive scheme will also be extended to run until the 2029-2030 financial year. The ending of Employee Car Ownership Schemes, which was due to come into effect in April 2026, has also been delayed. These schemes can now run until April 2030. Finally, a raft of measures for EV charging infrastructure was announced. This includes an extra £100 million investment to increase the infrastructure in the UK. In addition, a review into the cost of public EV charging will be launched in the first quarter of 2026. This will run until the third quarter of the year, after which a report will be published.