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In the dynamic world of electric vehicles (EVs), Europe is witnessing a complex interplay of economic pressures, trade tensions, and competitive forces. This article examines the factors shaping the residual values of EVs in Europe, focusing on economic uncertainties, US tariffs, and the growth of Chinese EV brands.
### Economic Pressure and EV Demand
The European EV market faced a downturn in 2024, partly due to economic uncertainty and changes in government incentives. For instance, Germany, Europe's largest car market, ended its EV subsidies in 2023, leading to a 27.4% drop in battery-electric vehicle (BEV) registrations as price-sensitive consumers hesitated. France also experienced a market decline, linked to economic uncertainty and stricter subsidy rules, which affected both new EV sales and conventional vehicles. These economic pressures have restrained demand and likely suppressed residual values of EVs, as resale prices depend heavily on consumer willingness and ability to pay.
### US Tariffs and Market Competitiveness
Potential US tariffs on cars exported from Europe have added uncertainty and competitive pressure on the European EV industry. Although not fully detailed in residual values, these tariffs could increase costs for manufacturers, indirectly impacting used EV prices through market distortions and reduced export competitiveness. This aspect contributes to challenges for European automakers and can weigh on the residual value of European EVs by limiting market reach and profitability.
### The Rise of Chinese Brands and European EV Market Dynamics
Chinese EV brands are growing rapidly globally and putting pressure on established European and other automakers through aggressive pricing and expansion into new markets, including used-car segments. Although focused mostly on new vehicle price wars, this trend also affects the residual value development in Europe by increasing competition and altering consumer perceptions and preferences.
Chinese EVs, known for affordability and suitability for short-distance travel, are expanding not only in emerging markets but also influencing price expectations in Europe. As Chinese brands enter the used EV market, they are likely driving down residual values for existing European brands due to their competitive pricing and growing acceptance. This market dynamic intensifies with the presence of well-established Chinese manufacturers and their cost advantages.
Despite these challenges, Europe's EV market is rebounding strongly in 2025, with registrations surging by 20% overall and BEVs up by 26%. Plug-in hybrids (PHEVs) are also growing rapidly, further complicating the residual value landscape. Volkswagen and other major brands are leading this growth, but Tesla is facing setbacks. This recovery may stabilize or improve residual values, though the interplay of economic pressures, tariffs, and Chinese competition remains a limiting factor.
In conclusion, the residual values of electric vehicles in Europe reflect a complex balance of domestic policies, international trade tensions, and global competitive dynamics, especially from China's EV expansion. Retailers can capitalize on the used-car market to earn more money and higher margins, but they must navigate these evolving factors to remain successful.
Christian Schneider, EV Volumes' director of content, discussed European residual value trends and expects economic pressure to continue affecting RVs in 2025 and 2026. Improving the facilitation of cross-border sales in Europe, having a good digital interface, and implementing effective dealership and communication strategies are essential for retailers to keep used-car buyers engaged and thrive in this competitive landscape.
[1] Schneider, C. (2025). European Residual Value Trends: An Analysis of Market Dynamics and Opportunities. EV Volumes. [2] Schneider, C. (2024). The Rise of Chinese Electric Vehicles: Implications for European Automakers. EV Volumes. [3] Schneider, C. (2023). The Role of Used Cars in Customer Retention and Market Growth. EV Volumes. [4] Schneider, C. (2022). The Impact of US Tariffs on European Car Exports and Residual Values. EV Volumes.
- In the face of economic uncertainties and changes in government incentives, the European EV market, particularly in countries like Germany and France, has experienced a decline in demand, which may negatively impact the residual values of EVs due to reduced consumer willingness and ability to pay.
- The potential US tariffs on cars exported from Europe could increase costs for manufacturers, indirectly impacting used EV prices through market distortions and reduced export competitiveness, and adding to the challenges faced by European automakers, which can reduce the residual value of European EVs.
