The Mobility Transition in CEE – Closing the Gap?
Thursday 1st February 2024
In many ways, 2023 was a year of good progress on the EU transition journey, writes Jon Lawes, Managing Director at MHC Mobility. Battery-electric vehicles (BEVs) reached a significant 14.6% share, with the total volume of EVs for the year up nearly 40% and exceeding 1.5 million units. Meanwhile policymakers continued to build out legislation, like the Net Zero Industry Act and more ambitious charging infrastructure targets, to support long-term efforts.
But for the EV transition to truly succeed, more attention is needed on the growing regional disparities across Europe rather than the success stories in more established markets. The rate of electrification is certainly not homogenous. Eastern Europe may be a significant manufacturing hub for EVs – Poland is the largest battery exporter in the EU and ranks second worldwide behind China. But many countries are further behind their western neighbours in the EV adoption shift.
As the industry counts down to the 2035 ICE phase-out deadline, closing this gap between member states with a harmonised availability of charging infrastructure across the entire Bloc will be a key pillar of Europe’s transition effort - and one that could define its success.
The tortoise and the hare?
Western Europe has been pressing ahead but there are still big gaps that local governments need to act on further afield.
In the central and eastern region, the share of BEV registrations remains below 5% in several countries, including Czechia (3%), Poland (3.6%) and Slovakia (2.7%). Although there were signs of improvement last year, this remained minimal next to other European peers. For instance, Denmark almost doubled the share of BEV registrations over the last year to 36.3%.
One of the many obstacles is insufficient charging infrastructure. The number of public charging points in the EU increased by 48% to 475,000 during 2022. However, the divide is stark with much of the continent’s charging infrastructure aggregated in just a few countries, particularly the Netherlands and Germany where both have a well-developed electricity grid and charging network. At the same point in time, Poland, Bulgaria, and Romania all had fewer than 10 charging points per 100,000 people, compared to a European average of 106.
The EV charging conundrum facing Europe’s automotive industry remains unresolved. Appetite for private and public investment in charging infrastructure is intrinsically linked to demand for drivers to make the switch. Yet the sub-optimal experience for fleets and private buyers goes hand in hand with a reluctance from drivers to go electric, particularly in central and eastern Europe where there is an insufficient public charging network.
Not all doom and gloom
However, it would be wrong to suggest national governments aren’t taking action.
Southern and eastern Europe may be lagging behind on public infrastructure, but the growth trajectories have been strong, particularly in Czechia and Slovakia, and we’re yet to see how much further ground has been made during the past year.
Meanwhile, incentive regimes are also commonplace, albeit varying from country to country. For instance, Czechia offers buying incentives as well as registration, road and company car tax exemptions for BEVs and PHEVs. And in Poland buying incentives for BEVs range up to EUR6,000, increasing to grants of over EUR7,000 in Hungary. These are generous when compared to many western European states but the adoption challenges facing these countries are arguably greater.
Elsewhere, many countries are not providing enough support for investors in the EV infrastructure space, which remains a key adoption challenge. Czechia is a rare example in the region offering an ‘infrastructure bonus’, whereas installation support, tax deductions and subsidies exist across Sweden, Switzerland, Austria, the UK, Spain, Italy and Belgium.
Light at the end of the tunnel
There is real potential for mass EV adoption in the CEE region, but we’re still only in the foothills and the gap is far from closing.
It is encouraging that private buyer incentives are in place to help boost EV adoption in the region, but these may need to be more generous and consistently attractive to really move the needle on adoption, while charging access remains a persistent issue.
The region remains a key piece of the transition puzzle for Europe. More ambition on a pan-European level, coupled with sustained efforts by local governments and private entities to fund electrification, will be essential to leveling the playing field.
Sources
Poland recharges its batteries - Trade.gov.pl
New registrations of electric vehicles in Europe (europa.eu)
EV incentives in 2024: Europe’s minor fleet markets | Fleet Europe
EV incentives in 2024: Europe’s major fleet markets | Fleet Europe