2025: A pivotal year for electric vehicles in Europe

Wells Fargo Research Team Wells Fargo

2025 saw a renewed appetite among European consumers for electric cars. This enthusiasm comes after a lacklustre 2024, when registrations stagnated following the late 2023 announcement regarding the reduction of budgetary support in France and the complete withdrawal of such support in Germany. Yet, numerous studies, including the joint report by Pisani-Ferry and Mahfouz, had deemed these subsidies crucial.

Sales development of electric vehicles, as % of total

The post COVID fiscal consolidation eroded the support for electric vehicles. In Germany, the purchase subsidies vanished after the Karlsruhe Court ruled that unspent COVID funds could not be repurposed for electrification without a new parliamentary vote granting an exception to the EU debt brake rule. In France, the subsidies were reduced. Coupled with a European preference rule that increased the cost of manufactured vehicles (including those from China), this resulted in a decrease in the proportion of EVs in new car sales in 2024.

However, that hiatus has now ended. When asking whether a country can tighten its budget deficit and still back electrification, the answer is yes. France exemplifies this by using energy efficiency certificates. These certificates are funded by energy producers – ultimately passed on to energy consumers – with a relatively minor impact on inflation, given that inflation currently hovers around 1% and market electricity prices are on a downward trajectory. This scheme therefore does not put an additional strain on public finances.

Download the Full Report!

Author

Wells Fargo Research Team

Wells Fargo

EUR/USD hovers around 1.1850 ahead of FOMC Minutes

EUR/USD stays on the back foot around 1.1850 in the European session on Wednesday, pressured by renewed US Dollar demand. Traders now look forward to the Minutes of the Fed's January monetary policy meeting for fresh signals on future rate cuts.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.