The market share of Electric Vehicles (EVs) in Europe fell to 13.6 percent in July, as car sales continued to bounce back following the COVID pandemic and disruptions to supply chains eased.

European auto sales rose for a 12th consecutive month in July, with new car registrations reaching 851,156 units last month, up 15.2 percent from the same period last year, according to the European Automobile Manufacturers Association (ACEA). 

Battery-electric car registrations increased by 60.6 percent, but demand for combustion engines remains solid with European customers seemingly reluctant to fully embrace greener alternatives.

New sales of EVs had represented 14.1 percent of the market in June, ranking ahead of diesel cars for the first time. But that fell to 13.6 percent in July while diesel accounted for 14.1 percent.

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Petrol cars had the biggest slice of the market at 35.8 percent, followed by hybrids at 25.6 percent. It is a conundrum for automakers and drivers who are facing a 2035 deadline set by the European Union to phase out sales of new combustion engine vehicles.

The EU plans to bring car emissions down by 55 percent from 2021 levels by the end of the decade, and to zero by 2035. But customers are put off by the high prices of electric cars, despite the long-term benefits through lower running costs.

With cost appearing to be a huge obstacle for customers, many countries have been offering different strategies to encourage the take-up of greener vehicles. The ACEA has revealed 21 of 27 EU member states offer tax breaks when buying a low-carbon car, while 20 countries offer money to help steer through a purchase.

France has plans for a social leasing scheme to push poorer households to use electric cars, with Romania and Belgium offering financial incentives.

In a warning to future policy makers, Julia Poliscanova, analyst at campaign group Transport and Environment, said: "What we have learned is that it's not enough just to incentivize electric vehicle purchase and ownership. You also have to disincentivize the purchase of conventional cars at the same time."

European carmakers also have plenty of rivals to worry about. China looks set to continue making huge strides in the global market for electric cars.

Chinese automaker BYD recently marked the completion of its five millionth new energy vehicle - a world first to reach this milestone, according to the company. In China, the term new energy vehicle (NEV) is used for cars that are fully or predominantly powered by electric energy, which include plug-ins, hybrids and fuel cell.

They also announced on Monday a rise in net income of 205 percent to $1.5bn in the six months to the end of June as they dominate the market for plug-in hybrid and battery-powered electric vehicles in China.

Forecasts say China will become the biggest exporter of cars this year, overtaking Japan. BYD, one of the world's biggest EV battery producers, is driving this wave of Chinese EV exports to Europe. Of new EVs sold on the continent this year, eight percent were made by Chinese brands – double the 2021 share, according to autos consultancy Inovev.

A telling sign of China's growth in Europe is that it will hold its own electric mobility trade show, the World New Energy Vehicle Congress (WNEVC), in September as part of the IAA event in Munich – the first time the WNEVC takes place outside of China.

Christian Hochfeld, head of Berlin-based clean mobility think tank Agora Verkehrswende, said: "It's a strong signal clearly indicating the Chinese carmakers are coming, and they are coming to stay.

"They will probably become market leaders in certain segments in Europe. That will be the new normal. Established European carmakers are facing huge challenges."

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