Faced with the closure of the Strait of Hormuz, car electrification in Europe no longer appears to be merely a matter of climate policy or industrial innovation. After all, even now that the fragile peace between Washington and Tehran seems to be paving the way for a gradual recovery in oil flows, in keeping with Trump’s motto “let the oil flow”, Europe’s persistent dependence on fossil fuels and its implications for the continent’s energy security remain at the forefront.
“More than 1 billion barrels have been lost, and oil prices have risen by 50% since the start of the war,” said French MEP Thomas Pellerin-Carlin, a member of the S&D Group, to Renewable Matter, recalling that “petrol inflation is already crushing working families across Europe, and the crisis has already cost the EU €62 billion – around €16 billion in public spending on emergency measures, on top of €46 billion in additional fossil fuel import costs, according to the Jacques Delors Institute”.
A question, therefore, arises: while China and Japan are ramping up investment and production capacity in the electric vehicle sector to strengthen their energy and industrial security, how has Europe responded in recent months in terms of both the development of the EV market and the maintenance of policies to support demand?
The inevitable price differential
Though only a small proportion of Europe’s oil physically passed through the Strait of Hormuz, in recent months the closure has triggered the biggest supply shock in recent history, putting 15% of global production at risk and causing prices at the pump to rise rapidly. “The 2021–2022 energy crisis showed how quickly a shock can escalate”, continues Pellerin-Carlin. “When Russia reduced gas exports in late 2021, prices doubled from €15 to €30 per megawatt-hour and were already seen as a crisis. Yet in 2022, prices surged to €100-€300 following the full-scale invasion of Ukraine. Even in the event of an immediate and lasting peace between Khamenei, Trump and Netanyahu, it would take at least six months to restore 80% of pre-war production and a full year to return to normal levels.”
In this context, the difference in fuel costs between internal combustion engines and electric motors is one of the key indicators to consider. “In early April 2026, the crisis premium was five times higher for petrol cars and PHEVs than for BEVs, and 11 times higher for diesel cars,” Yoann Gimbert, Senior Data Analyst for E-mobility at Transport & Environment (T&E), tells us.
“At the EU level, the use phase price of an average new petrol car was €13.3/100 km in early April, compared to €11.6/100 km in 2025. This implies a crisis premium of €1.7/100 km during this April peak. For diesel cars, the premium reached €3.8/100km (an increase in the use phase price from €10.8/100km in 2025 to €14.6/100km in early April). This results in a monthly cost of €133 for petrol cars and €146 for diesel ones. By comparison, the use phase price of an average BEV with home charging was €6.2/100 km in a scenario where the electricity price increased by 6% by early April, compared to €5.8/100 km in 2025. This is equivalent to a temporary premium of €0.35/100 km for BEVs and results in a monthly cost of €62 per month for charging.”
The industrial front
On the industrial front, major European manufacturers are navigating this phase with highly ambitious financial targets and a strategy that remains unbalanced. “Legacy European carmakers have set financial targets that put pressure on their margins in order to increase profitability,” continues Gimbert. “They aim to stabilise or increase their operating margins in 2026, with most of them having a long-term ambition to achieve a double-digit margin. This focus on profitability has led to continued investment in ICE technologies, while the focus on large vehicles and SUVs has kept BEV prices above 2020 levels and delayed price parity with ICEs, as reported in T&E EV progress report. Although most carmakers have confirmed their ability to achieve BEV-ICE margin or price parity well before 2030, and despite growing EV sales, European carmakers are supporting a weakened BEV sales target for 2030 as part of their lobbying efforts through the European Automobile Manufacturers' Association (ACEA).”
According to the organisation’s estimates, the ACEA proposal, as part of the review of CO₂ emissions regulations for cars, could result in sales of battery electric vehicles (BEVs) staying at their current market share of 21% for the rest of the decade, rather than reaching the 57% target set by the current regulations. “With their weak BEV ambitions and the growth of Chinese imports, European carmakers have no strategy to prevent Chinese carmakers from taking over an increasing share of the BEV market in the coming years,” adds Gimbert.
Yet, on the demand side, the energy sector’s evolution is driving more and more motorists towards electric vehicles. “Rising oil prices are pushing consumers towards EVs,” explains Robin Loos, Head of Transport & Mobility at BEUC, an organisation representing 44 independent consumer associations from 31 countries. “Numbers for new and used car sales are rising, and consumers are finally able to find affordable EV options as alternatives to conventional cars.”
The problem, he adds, is that “the supply is still too limited: small, entry-level EVs are only arriving and the supply on the second-hand market is still limited (second-hand buyers mostly look for these small cars). EV affordability becomes clearer by the day, and our analysis confirms they will be the go-to option for consumers (they already are for many). The economics are blatantly in favour of EVs.” The latest available figures relating to April 2026 – as noted by Motus E in a press release issued in early June – show that the market share of electric cars stood at 26.2% in France, 25.9% in Germany, 9.4% in Spain and 26.2% in the United Kingdom. In the same month, the market share in Italy stood at 8.5%. In Italy alone, according to the new White Paper published by Motus E, the number of electric and plug-in vehicles on the road could reach around 9 million by 2035.
Amidst emergencies and incentives, which way forward for Europe?
In response to the closure of the Strait of Hormuz, Pellerin-Carlin recalls that “Member States have adopted more than 210 emergency measures across 23 countries, yet these largely rely on generic fuel tax cuts and blanket price caps that weaken incentives to reduce demand and risk aggravating shortages. Electrification remains largely absent: only about €2 billion of the €62 billion mobilised is directed toward it, and only seven countries have adopted explicit measures. The Netherlands stands out, allocating nearly 40% of its response to structural solutions such as electric vehicles”.
The mosaic of national tax policies thus comes into play. T&E’s Good Tax Guide paints a picture of a fragmented landscape. “Only 13 EU Member States currently offer purchase subsidies for private buyers of battery-electric cars, and only 8 offer them to corporate buyers”, continues Gimbert. “At the same time, just 9 out of 27 Member States have company car tax systems that clearly incentivise businesses to choose EVs. This leaves a major policy gap: while some countries are trying to support EV demand, many still fail to close the cost gap with fossil-fuel cars, and 13 Member States continue to subsidise petrol company cars.”
According to T&E data, this results in quite different approaches across the four main European markets. In Germany, the government has reintroduced income-based incentives for EV purchases of up to €6,000 – in practice closer to €3,000 for most households – but this move is undermined by a tax regime on company cars that continues to favour petrol-powered models, particularly the largest and most polluting ones.
France has based its Bonus Écologique and Leasing Social schemes on an Eco-Score that favours vehicles produced in Europe and the local production of batteries, alongside strong tax disincentives for petrol-powered company cars: a prime example of using tax policy to support both electrification and European industrial value. In Italy, the Ecobonus – offering income-linked grants of up to 13,750 euros and scrappage incentives – ran out of funds within 48 hours and, despite reforms to benefits in kind, still leaves incentives for company fleets lacking. Spain, with its Plan Auto+ and direct discounts of up to €4,500 linked to “made in the EU” criteria, has not yet established a tax system capable of decisively driving either private individuals or businesses towards electric vehicles, and taxation on company cars remains too weak to truly phase out petrol and diesel.
According to T&E, a way out of the current deadlock requires much clearer conditions: “EU lawmakers and national governments should ensure that public financial support and company car tax benefits are directed only towards electric vehicles manufactured in Europe. This would help cut oil imports, support local jobs and strengthen Europe’s automotive industry,” concludes Gimbert.
Consumers and infrastructure
While the cost-effectiveness of electric vehicles is largely determined by their running costs, the decision is not based solely on the price at the charging station. “Europe’s charging infrastructure is improving, but progress is still uneven,” Mathias Wiecher, CEO of Spirii – a company that develops software platforms and technological solutions for electric vehicle charging – tells Renewable Matter. “In more mature EV markets such as the Netherlands, Norway, Denmark, Germany and France, charging networks are becoming denser, more reliable and easier to access. In fact, infrastructure deployment has in many cases moved ahead of vehicle adoption, creating the capacity needed to support continued growth in EV registrations over the coming years.”
In other areas, however, the classic chicken-and-egg dilemma continues to be a problem. “Slower EV uptake makes it more difficult to build a compelling business case for infrastructure investments, while insufficient charging infrastructure continues to slow adoption,” sums up Wiecher. In his point of view, “the main issue is no longer simply the number of charging points, but rather whether charging is available in the right locations, with the appropriate power levels, integrated with the right software, and reliable enough for day-to-day use. This is especially important for fleets, logistics operators, buses, and heavy-duty transport, where charging is not a convenience but a business-critical infrastructure”.
On the consumer side, however, BEUC identifies two key obstacles. “Regarding charging, the main issues our members show relate to price transparency and ease-of-use,” explains Loos. “Both these issues hinder fair competition and access to cheaper prices. It also affects the capacity of regulatory authorities to intervene in case of market disruptions. More chargers are indeed needed in some regions, but we have seen a swift and growing number of chargers popping all over Europe, often much faster than EV uptake. The crux of the issue is to make sure competition actually works, and that regulators at the EU level clean up the pricing structure and allow for easy comparison or payment.”
The missing pieces: regulatory certainty, electrification and the cost of energy
For Spirii’s CEO, Wiecher, the missing piece concerns the consistency of the rules and the cost of energy: “The EV ecosystem – whether car manufacturers, charging infrastructure players, or software platforms – operates on long term investment strategies and requires a stable regulatory environment. Changing targets mid-way penalises those who have already committed to the transition and puts significant investments at risk”.
Long-term competitiveness will depend on “not only on the availability of charging infrastructure, but also on the cost of electricity and charging,” reason why policymakers should “continue accelerating the deployment of renewable energy, enable greater use of flexibility services to reduce system costs, and ensure that taxes and levies do not unnecessarily increase the cost of electric driving”.
At the EU level, however, the “AccelerateEU” communication of 22 April 2026 aims to strengthen energy resilience through electrification, removing barriers in industry, transport and the construction sector, and making aid to energy-intensive sectors conditional on commitments to energy efficiency and clean energy. A target, according to Pellerin-Carlin, “undermined by the proposal to weaken CO₂ standards for cars and the 2035 phase-out of combustion engines. This mixed signal risks slowing a market where battery electric vehicle sales are already rising, despite the clear direction set out by President von der Leyen: the future of cars is electric”.
Concretely, “Europe needs an oil boiler scrappage scheme to free millions of rural households from heating oil, and a Social Leasing Scheme to deploy ten million affordable electric cars, made in Europe, for essential workers – both powered by domestic energy rather than imported oil. Beyond emergency action, Europe needs a clear structural exit strategy – whether called a Green Deal, Freedom Deal or Electrification Action Plan – focused on relying on its own energy sources”. In short, the degree to which the EU is able to translate these guidelines into coherent decisions on standards, incentives and investment will determine whether the current crisis remains yet another fossil-fuel interlude or marks the beginning of a genuine era of electrification.
Cover: photo by Envato