Inside Germany's Evolving Electric Vehicle Market

How quickly are electric vehicles rising up the automobile shopping lists of German consumers? Our most recent survey of 250 auto dealers across the country shows expanding demand for EVs, especially among premium buyers.

The rise of EV demand in the premium segment

While dealers say traditional internal combustion engine (ICE) vehicles remain most desirable overall, battery electric vehicles (BEVs) are a strong second. In the premium segment, BEVs hold the edge over ICE vehicles—a stark departure from the mass-market segment, which heavily favors ICE vehicles. This implies big to-dos for mass-market OEMs—they need to overinvest in bringing affordable products to the market, educating customers on BEVs, and supporting customers in finding convenient and economic options for charging.

Premium dealers are also 5X more confident in their ability to convert EV skeptics than mass-market dealers.

High prices remain the top hurdle

Among all potential buyers of BEVs, high prices remain the main obstacle, followed closely by worries about limited range and charging issues.

The split between mass-market buyers and the premium segment is particularly pronounced when it comes to concerns over charging, with mass-market buyers more than four times as concerned about access. Mass-market customers are less likely to be able to charge at home because they are more likely to rent in multi-unit apartment buildings where home charging often is not available.

Despite strong growth, sales will fall short of 2035 EU policy goals

The gulf between the premium and mass-market BEV segments is expected to expand through 2035, with premium demand far outpacing mass-market demand. With the slower pace of growth for the mass market, sales would fall far short of EU public policy ambitions for 100% EV adoption by 2035.

China and the Western OEM advantage

While Western-based dealer networks enjoy a competitive advantage in Germany, Chinese automakers are making inroads into the market. Many dealers rate Chinese BEV options as rapidly improving. 

Almost half of Germany's auto dealers report that Chinese BEVs either are improving or already better than Western-produced options.

Despite the rapid advances in the quality and reliability of Chinese-built BEVs, stronger dealer networks remain a significant competitive advantage for Western OEMs. 

Chinese BEVs are expected to gain share

The Western OEM competitive advantage could be in jeopardy over the next decade, with China's share of the market expected to reach nearly 20% by 2035.