Europe Electric Powertrain Market Outlook, 2029

The European electric powertrain market becomes strong and nimble despite the gaps in infrastructure, technology barriers, and regulatory complexity. Public-private partnerships, research collaborations, and continued innovation offset these challenges, which accelerate the deployment and scale of electric mobility solutions. European governments and multiple industrial stakeholders utilize the learning flows from the early phases remarkably well for a fine-tuning of their policies, infrastructure planning, and further enhancement of market readiness for next-generation electric vehicles. Cross-sectoral collaboration and the emergence of an ecosystem are core characteristics of the European electric powertrain market.

European public-private partnerships are being encouraged, including the rollout of smart grid technologies, renewable energy integration, and energy storage for facilitating the electrification of transport. Electric powertrains form an integral part of the vision of sustainable urban planning and smart mobility solutions for Europe. Local and pan-continental level, major cities on the continent are considering policy actions for e-mobility to mitigate traffic congestion, improve air quality, and enhance the quality of life. Electric vehicles play a core role in achieving urban sustainability goals: they reduce noise pollution and greenhouse gas emissions in densely populated areas.

The continent is also equipped with an extensive network of public charge points, featuring fast chargers along main highways, urban centers, and rural areas. Initiatives like the EU's Connecting Europe Facility fund and national investments forecasts extend the charge station network, reduce charging times, and improve access to electric mobility. Other projects, such as Ultra-E or many carmakers collaborating with charging providers, even accelerate the rollout of high-power charging stations across the continent of Europe.

According to the report, the Europe Electric Powertrain market is anticipated to grow at more than 18% CAGR from 2024 to 2029. The growing commitment of Europe to reduce carbon emissions as well as air pollution is a major driver of the electric powertrain market. For example, urban air pollution constitutes some serious issues in this continent, especially in large cities like London, Paris, and Berlin. As a result, European governments have enacted stringent laws on emission and recently called for phase-out programs for vehicles powered by fossil fuel.

Both the EU's CO2-emission targets for vehicles and its Euro standards on vehicle emissions are among the most stringent in the world, forcing autos to focus either on electric and hybrid vehicles or to meet regulatory requirements. Leading carmakers such as Volkswagen, BMW, Mercedes-Benz, Renault, and others are investing heavily in research and development of electric vehicle platforms, battery technologies, and autonomous driving systems. These investments underpin only the triad of development in EV performance, range, and safety but also position Europe's carmakers at the top during periods of global competition on the electric vehicle market. Other initiatives have been established by CEF fund of the EU and funds at the national level for the extension of the network of charging points, the reduction of charging times, and the improvement in access to e-mobility. Projects like the Ultra-E project and cooperations of car manufacturers with charging providers support the rollout of high-power-charging stations across the continent.

Market Drivers

• Strong Environmental Policies: Europe’s stringent environmental regulations and ambitious climate goals, such as the European Green Deal, are major drivers for the electric powertrain market. These policies aim to make Europe the first climate-neutral continent by 2050, pushing automakers and consumers towards electric vehicles. Stringent CO2 emission targets and bans on the sale of new petrol and diesel cars by 2035 in several countries further accelerate the adoption of electric powertrains.
• Consumer Awareness and Demand: European consumers are increasingly aware of environmental issues and the benefits of electric vehicles, driving demand. This consumer shift is supported by extensive marketing and educational campaigns by both governments and automakers. As a result, there is growing interest in EVs, which are seen as a practical and responsible choice for reducing individual carbon footprints and contributing to broader environmental goals.

Market Challenges

• Supply Chain Disruptions: Europe faces challenges related to supply chain disruptions, particularly for critical components like batteries and semiconductors. The COVID-19 pandemic and geopolitical tensions have exposed vulnerabilities in the supply chain, leading to production delays and increased costs. Ensuring a stable and resilient supply chain is crucial for maintaining the momentum of the electric powertrain market in Europe.
• Integration with Renewable Energy: Ensuring that the growth in electric vehicle adoption is matched by an increase in renewable energy sources is a challenge. Balancing grid demands and ensuring a sustainable energy supply is critical for realizing the full environmental benefits of EVs. Investments in renewable energy infrastructure and smart grid technologies are necessary to support the growing number of electric vehicles and their charging needs.

Market Trends

• Expansion of Charging Infrastructure: There is a significant trend towards expanding charging infrastructure across Europe. Countries like Norway, Germany, and the Netherlands are leading the way with extensive networks of fast-charging stations. The European Union is also investing heavily in cross-border charging infrastructure to support long-distance travel. This growing network of charging stations is crucial for alleviating range anxiety and promoting the widespread adoption of electric vehicles.
• Electrification of Commercial Vehicles: The electrification of commercial vehicles, including buses, delivery vans, and trucks, is gaining momentum in Europe. This trend is driven by both regulatory pressures and the potential for cost savings over the vehicle lifecycle. Companies and municipalities are investing in electric fleets to meet sustainability goals, reduce operational costs, and comply with emissions regulations, further driving the growth of the electric powertrain market.

Passenger cars dominate the European electric powertrain market because of stringent emission regulations, consumer demand for sustainable mobility, and rigorous infrastructure development in this sector.

The European Union has Deutsch set very ambitious reduction targets for CO2 emissions from vehicles, hence pushing the vehicle manufacturers to make huge investments in electric powertrain technologies to meet regulatory requirements. Stringent emission standards, with fines levied for non-compliance, act as incentives for vehicle manufacturers to develop and deploy electric passenger cars at a faster rate. The demand for green vehicles is also becoming increasingly high from European consumers, particularly in highly environmentally conscious countries like Norway, Germany, and the Netherlands.

Government support for electric powertrains continues to drive demand, driven by incentives such as purchase subsidies, tax breaks, and exemptions from congestion charges or tolls. This lowers the total cost of ownership, while financial incentives fasten electric vehicle market penetration in the passenger car segment. The other key driver of powertrain electrification for passenger cars in Europe includes its extensive public-charging infrastructure. Readiness in fast chargers along major highways and key cities reduces range anxiety and enables the practical use of electric drive vehicles for long trips. The technology leadership from European carmakers such as Volkswagen, Renault, and BMW to further reinforce confidence through the model lineup that carries aggressive features and prices gives more cause for interest in electric cars.

With economically stringent emission norms, high consumer demand for green mobility, and infrastructure, the religious dominance of battery electric powertrains happens in Europe.

Such a regulatory environment again forces carmakers to nearly minimize vehicle emissions by pushing them to make enormous investments in electric powertrain technologies, hence encouraging innovation and broadening the available range of electric vehicles to consumers. Strong consumer preference exists in Europe, especially in highly environmentally conscious Norway, Germany, and the Netherlands. Various forms of government support, especially purchase subsidies, tax breaks, or exemption from congestion charges or tolls, are critical to the adoption of battery electric powertrains. Such fiscal incentives reduce the total cost of ownership and accelerate the market penetration taken by electric vehicles in the passenger car segment.

A powerful driver for the Anglicization of battery electric powertrains in Europe is its comprehensive web of public charging infrastructure. Fast chargers operating along major highways and in urban areas allay range anxiety and support long-distance trips by electric vehicles. Complementary technological leadership from European carmakers like Volkswagen, Renault, and even BMW enhances the prospect by which battery-electric vehicles offer a wide model range with rich features at competitive prices.

BEV is leading in the market due to the EU-wide CO2 targets for automakers driving BEV development.

Europe has established itself as the world leader in BEV uptake, mainly driven by Norway, the Netherlands, and more recently Germany. Strong regulatory support is one of the keys to success here. Countries set stringent CO2 targets for OEMs while offering generous incentives to consumers in most countries. The European Union's commitment to GHG reduction has yielded policies that very strongly favor BEVs over other powertrain technologies. Low-emission zones are being put into place across cities in Europe, with plans for a future banning of ICE vehicles, stimulating electrification. Many of these compact geographical cities of Europe have a drive toward more public transportation and lend especially good fits to urban mobility for BEVs.

European players have focused on BEV, where large investments have been made by Volkswagen Group, Renault-Nissan Alliance, and BMW Group. All these are rapidly developing their electric vehicles under respective company portfolios. This region has major potentials of renewable energy integration into the grid that will supplement truly zero-emission transportation. Challenges remain, ranging from charging infrastructure disparities between Western and Eastern European countries to the need for a just transition of workers in the traditional automotive industry. The European market is longitudinally developing innovation in smaller, more affordable BEVs designed for urban use, and luxury electric vehicles competing with established premium brands.

The Germany leads in electric powertrain manufacturing because it is supported by a strong existing automotive industry, robust government support, and a commitment to technological innovation and sustainability.

Germany is the homeland of some of the world's most famous car brands like Volkswagen, BMW, and Mercedes-Benz, comprising a long history of quality and ingenuity in the production of automobiles. The companies have invested heavily in electric vehicle technology, but the former used its engineering prowess to advance electric powertrains. For its part, the German government has been the prime driver for this transition to happen through ambitious climate goals and large incentives for manufacturers and consumers alike. It spans from billion-dollar funding for research and development to reduced tax rates for buying an EV or even funds investing in the building of charging infrastructure.

This makes for a powerful renewables sector - powered by Germany - that perfectly goes in hand-in-hand with a drive for electrification. This synergy is particularly perfect because most of the first series of key components for electric cars hail from Germany. Its sound industrial base and highly qualified workforce have set it up to adapt incredibly fast to new developments in the automotive sector - all the more so since suppliers had vaunted their own future in making parts for e-powertrains.

Germany's geographic position in the center of Europe and its strong influence on European Union decisions have helped it design regional policies particularly very conducive to electrification. Besides, globally competitive research institutions and a cooperative culture between academia and industry have further accelerated the pace of innovation in the fields of battery technology, power electronics, and electric motor design. German carmakers have responded vigorously to the heightening consumer demand for EVs by providing a wide range of models across several segments.

Years considered in this report:

• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in the report:

• Electric Powertrain market outlook with its value and forecast, along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Vehicle Type:

• Passenger Car
• Commercial Vehicle

By Component:

• Battery
• Power Electronic Controller
• Motor/Generator
• Converter
• Transmission
• On-Board Charger

By Application:

• BEV
• HEV/PHEV

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. After this, the research team made primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once the research team attained the primary data, they verified the details obtained from secondary sources.

Intended Audience

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Electric Powertrain industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.