Volkswagen’s electric cars are no longer a mere side project
Europe’s electric car market made a leap in August that few expected to happen so quickly at the start of the year. The share of fully electric cars rose to 30.5% across 16 major markets, while registrations increased by 54.2% year on year. For Volkswagen, this marks an important turning point: the ID models are no longer an expensive side project that has to be supported by profits from combustion-engined cars, but an increasingly large part of its core European business.
Volkswagen is not alone in this game, nor is it even the furthest advanced. BMW already sells more than a quarter of its cars in Europe as electric vehicles, Renault is moving in the same direction with the Renault 5, and Mercedes-Benz is rapidly increasing sales of its electric models with the new CLA, GLC and GLB. Breathing closest down everyone’s neck is BYD, which no longer wants simply to sell cars in Europe but to establish an entire manufacturing network here.
The next battle for electric cars is therefore no longer about whether Europeans will buy them at all. The question is whose cars they will buy.
Volkswagen has one advantage Tesla does not
Volkswagen Group sold 377,000 fully electric cars in Europe in the first half of 2026, 8.4% more than a year earlier. The group calls itself the leader of Europe’s BEV market, and its electric-car order backlog increased by more than 50% compared with the end of 2025. It is important to look at where these cars come from.
None of the top three electric models in the group in the first half carried a Volkswagen badge. The most popular was the Škoda Elroq, with 59,900 cars, followed by the Volkswagen ID.4 and ID.5 combined with 53,700, and the Škoda Enyaq with 48,300 cars.
This shows Volkswagen Group’s greatest strength. The group does not have to rely on a single model, or even a single brand. Škoda covers the more practical price range, Volkswagen the mass market, Cupra the sportier end, and Audi the premium segment.
Tesla’s answer to this is still essentially the Model 3 and Model Y.
Volkswagen’s advantage, therefore, is not necessarily that it knows how to build a better electric car. It simply has many more places in its price list where it can put an electric car.
BMW is actually further ahead in electrification
Volkswagen’s volumes are large, but BMW shows that a premium manufacturer can shift to electric cars even faster.
Fully electric cars accounted for around 28% of BMW Group’s European sales in the first half of 2026. In the second quarter, European electric-car sales rose by 38% to 81,445 vehicles. The first major weapon of the Neue Klasse, the new iX3, has proved particularly important. According to BMW, the electric iX3 already accounts for around half of X3-family cars ordered in Europe.
This is an instructive comparison for Volkswagen. BMW no longer sells the electric car so much as a separate “i model”, but lets the electric version compete directly with its traditional core model. If every other X3 ordered is electric, the electric car is no longer an alternative. It is half the market.
The Renault 5 is doing what the ID.3 was once meant to do
Renault has chosen a different route. Its strength is not a huge group or premium pricing, but relatively affordable electric cars suited to the European market. In the first half of 2026, electric cars accounted for 26.6% of Renault’s European sales, up 10.3 percentage points from a year earlier. The Renault 5 is Europe’s most popular B-segment electric car, joined by the Renault 4 and Scenic E-Tech.
This makes Renault a particularly important competitor for Volkswagen, because the Renault 5 is now essentially doing the job Volkswagen had hoped the ID.3 would do years ago: turning the electric car into an ordinary European hatchback.
Volkswagen’s response will be the ID. Polo and the group’s more affordable Electric Urban Car Family. The early signs are strong: Volkswagen Group collected more than 54,000 orders for the new family of small electric cars within a few weeks.
If the ID. Polo, Škoda Epiq and Cupra Raval genuinely reach high volumes, Volkswagen’s position will become considerably stronger. The next major growth in Europe’s electric-car market will not come from €80,000 SUVs, but from cars that the average person can afford without receiving an inheritance.
Mercedes woke up later, but it woke up nonetheless
Mercedes-Benz was for a time in an odd position with electric cars: the EQS and EQE were technically ambitious, but their distinct design and high prices did not make them the sales hits that had been hoped for.
The new strategy looks much more conventional. The electric versions of the CLA, GLC and GLB carry familiar model names, and Mercedes is once again integrating electric technology with its core range.
The result is starting to show. Mercedes-Benz electric-car sales rose by 51% worldwide in the second quarter of 2026, and by as much as 87% in Europe. In the first quarter, European electric-car orders rose by 107% year on year.
Mercedes nevertheless trails Volkswagen and BMW in terms of the electric-car share. The premium brand has another problem: Mercedes’ total sales in China fell by 30% in the second quarter.
Success with electric cars in Europe is welcome, but very large numbers will have to be sold to offset the losses in China.
Stellantis is playing a different game
Stellantis is Volkswagen’s most natural European rival by volume, but its electrification is more fragmented.
The group’s strength lies in more affordable models such as the Citroën ë-C3, Fiat Grande Panda and Opel Frontera. In the first half, Stellantis’ total sales in the EU30 increased by 3.8% to 1.37 million cars.
At the same time, Stellantis has deliberately retained greater technological flexibility. Petrol, hybrid and electric versions are offered on the same platforms, while through Leapmotor the group can use more affordable electric cars developed in China. This is not as elegant as BMW’s Neue Klasse or as centralised as Volkswagen’s MEB, but flexibility may prove very useful in a time of market uncertainty.
Ultimately, customers care rather little about how attractive a manufacturer’s platform strategy looks in a PowerPoint presentation. They want to know how much the car costs.
Tesla’s problem is not the electric car, but competition
Tesla is the most interesting comparison here, because the company does not have to transition from combustion-engined cars to electric ones. All its cars are already electric.
That former advantage is beginning to become a weakness.
Volkswagen, BMW, Renault and Mercedes can sell a customer an electric car, a hybrid or a combustion-engined model. Tesla has to sell an electric car. If the Model Y or Model 3 does not suit a customer, there is no Tiguan, X3 or GLC in the next showroom to move them into.
August demonstrated the contradictory nature of Tesla’s situation. Sales more than doubled in Germany and the Model Y was very strong in France, but the decline continued in several other European markets. One good month does not change the fact that Tesla now faces a much broader range of electric cars than it did a few years ago. Tesla taught European manufacturers that electric cars can be sold in high volumes. European manufacturers finally responded by starting to make them in high volumes.
BYD is a very different kind of threat
While Tesla put pressure on European manufacturers through technology and software, BYD is putting pressure on them through its entire industrial system.
The company makes its own batteries, develops power electronics, produces both fully electric cars and plug-in hybrids, and is rapidly expanding its model range.
More importantly, BYD does not intend to supply Europe from China forever. The company is starting production in Hungary and sees three European car factories and one battery plant as necessary in the longer term.
This changes the game for European manufacturers. The European Union can use tariffs against a BYD imported from China. That argument is considerably weaker against a BYD made in Hungary by European workers. Volkswagen’s real electric-car competitor may therefore not be Tesla in five years’ time. It may be a Chinese group that builds its cars in Europe, uses its own batteries and competes with Volkswagen in the same price range.
The electric car has won one battle; the war is only beginning
Electric cars’ 30.5% market share in August matters because it changes the nature of the debate. European manufacturers no longer have to prove that there are buyers for electric cars. They have to prove that they can produce them profitably at prices that BYD, Geely and other Chinese groups cannot match.
Volkswagen is well positioned in this fight precisely because of its volume. It has the Škoda Elroq, Enyaq, ID.3, ID.4, ID.7, Audi electric models, and soon the ID. Polo, Epiq and Raval.
BMW has progressed further in electric-car share. Renault has found a working formula for a more affordable electric car. Mercedes is recovering quickly. Stellantis is betting on flexibility. Tesla must prove that a range built around two core models is enough. BYD, meanwhile, is already building European factories.
That is why the most interesting question is no longer when electric cars will overtake combustion-engined cars in sales.
In some European markets, that question is already outdated.
Far more interesting is which of today’s carmakers will also make money from this transition. Selling electric cars is one thing. Sustaining a company the size of Volkswagen, BMW or Mercedes with them is quite another.
