Europe is leading the rEVolution

The E in EU doesn’t just stand for European anymore… it stands for electric

The EU has effectively banned the sale of new gas-powered vehicles after 2035, after approving a law that will force carmakers to achieve a 100% cut in emissions by that time. 

  • Though the law allows for the possibility of cars powered by carbon-neutral fuels, it sets the stage for an electric vehicle (EV) takeover of European roads.

Why it matters: The EU’s new law is perhaps the clearest directive from a major economy for automakers to change their production habits and make net-zero vehicles the priority. The rest of the Western world is eyeing similar changes. Last December, Canada proposed regulations that would also require all new vehicles sold to be zero-emission by 2035.

Zoom out: EV adoption may be hampered by these issues, but it is happening, just at different paces in different places. North America may be lagging, but EVs already made up over 20% of the auto market in China and Europe last year. In total, spending on EVs reached US$388 billion in 2022, per a BloombergNEF report, up 53% year-over-year.

  • That’s only a fraction of the ~US$2.5 trillion a year auto market, but it’s the growth that matters. Nearly 60% of all EV spending ever happened in the past 18 months. 

In recent months, carmakers from Nissan to Ford to Volkswagen have all touted EV expansions, while the once EV-resistant Toyota has changed its tune. Lawmakers are all in on EVs, and automakers don’t want to be left in their environmentally-sustainable dust.