Europe auto market accelerates EV shift as fuel-price surge undermines diesel demand

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Europe EV shift and diesel decline

Highlights

EU electric vehicle sales rose 63 per cent to 196,486 units in August, boosting market share to 28 per cent as diesel share falls to 6 per cent.
Wholesale diesel prices in Europe and the U.S. surged to $220 a barrel last month, over double pre-Iran war levels, prompting concerns about a prolonged global shortage.
Diesel's future in passenger cars faces further pressure as higher prices and second-hand value uncertainties drive automakers like Stellantis and Volvo Cars to phase out the fuel.

European sales momentum and diesel retreat

As reported by Financial Times, citing the European Automobile Manufacturers Association, EV sales in the EU jump 63 per cent to 196,486 units in August, lifting their market share to 28 per cent. In the same month, sales of new diesel cars across the 27-country bloc fall by almost a quarter to 45,403 vehicles, reducing diesel's share to 6 per cent.

Auto executives say the rebound marks a return to fast growth after two difficult years in which demand falls short of industry expectations. Oliver Blume, chief executive of Volkswagen, says the breakthrough has arrived in Europe, describing an electric car for many consumers as a declaration of independence from the fuel pump.

The shift is not limited to Europe. Sales growth is also picking up quickly in south-east Asia and Latin America, while the U.S. shows tentative signs of recovery even after President Donald Trump's move to end a $7,500 tax credit for EV buyers hurts sales over the past year.

Higher diesel costs reshape industry planning

The pressure on diesel intensifies as wholesale diesel prices in Europe and the U.S. hit $220 a barrel last month, more than double their level before the Iran war begins in February. The International Energy Agency warns this week of a global diesel shortage lasting until the middle of next year.

Executives across the sector increasingly question diesel's future in passenger cars. Erik Severinson, chief commercial officer of Volvo Cars, says higher prices and uncertainty over second-hand values are eroding the case for diesel, while Stellantis chief executive Antonio Filosa says there are very few applications left for the fuel outside trucks and commercial vehicles, even as the company continues to use diesel engines for a little longer in some models.

Renault says small vans and commercial vehicles are likely to be the next segment to move away from diesel as faster charging and cheaper electric models arrive. Europe remains particularly exposed because 40 per cent of cars on its roads still run on diesel, according to Transport & Environment, which estimates drivers are paying an extra €30 to fill a 50-litre tank compared with January.

Our earlier article on Malaysia welcoming China’s technology and knowledge transfer proposal highlighted how the two countries aim to deepen cooperation in areas including the electric vehicle sector, alongside major projects such as the East Coast Rail Link. It also noted discussions around additional financing for high-impact projects, signalling a push to accelerate capabilities and investment frameworks that can support EV-related development.

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