However, recent trends suggest a shift in this dynamic.

A significant 25% of all cars manufactured globally roll off the assembly lines in the European Union, where less than half of the cars sold operate on gasoline. According to Csaba Fekete, CEO of CIB Leasing, this is noteworthy because, except for the last two years, the market share had been shifting towards diesel over the past decade. Now, electric and plug-in hybrid vehicles are seeing an increase in market share.

However, the previously unbroken global annual growth rate of over 30% for EV sales faltered in 2023. Despite a nearly 34% increase in EV registrations in the EU last year, this number was buoyed by a nearly 50% growth in the first half, followed by stagnation and even a decline in countries like Germany in the latter half. EV sales still account for 30% of all car sales.

Manufacturers are under pressure to produce only climate-neutral vehicles from 2035 onwards. However, as pointed out by the CEO of CIB Leasing, this does not mean the exclusive production of electric cars or the complete elimination of internal combustion engines. Additionally, this directive, based on current trends, will be reassessed in 2026.

Csaba Fekete, CEO of CIB Leasing

The sales of electric vehicles heavily rely on government subsidies, which have been partially or completely phased out in most countries. For example, Norway, alongside Hungary, saw a decline in new car sales last year, albeit by a significantly larger margin of over 20%. The withdrawal of subsidies also severely impacted the segment in Germany.

Moreover, the political climate poses a significant risk to the proliferation of electric cars. Donald Trump has hinted at promoting the manufacturing of more internal combustion, gasoline-powered vehicles in the USA if re-elected, arguing it would create more jobs in automotive cities. The upcoming European Parliament elections from June 6-9 might see conservative parties directing the EU leadership towards extending or abandoning the 2035 climate-neutral target date to maintain the competitiveness of European manufacturers.

In Hungary, the number of electric cars registered in 2023 increased by 23% compared to 2022, and by 35% compared to 2021, even without any state subsidies available on the Hungarian market for the past year until February.

Now, subsidies are available again, but only for legal entities purchasing new cars. The financing options are not very attractive, as the maximum term for these schemes is 20 months, within which the supported vehicle must become the property of the financed client. This means that the client receives the subsidy only at the end of the term. A more favorable option for companies is the open-ended financial lease, which allows them to reclaim VAT on electric cars, significantly exceeding the amount offered by the governmental support after 20 months.

The support framework for electric cars is quite generous, with a total budget of 30 billion forints. Based on the average support amount of 3 million forints, this is sufficient to purchase about 10,000 electric cars, available until March 31, 2024. Given that approximately 5,700 electric cars were registered last year, it is likely that the deadline for using this support will be extended, believes Csaba Fekete.