Despite the accelerating global push for electric vehicles and renewable energy, the European automotive market is still highly reliant on "conventional" Internal Combustion Engine (ICE) vehicles. According to statistics, more than 70% of cars in Europe still run on gasoline or diesel engines, a trend that reflects the complexity and challenges of the region's energy transition.
The main reasons why internal combustion engine vehicles still occupy such a large market share in Europe are due to their long history of technology accumulation, well-developed infrastructure and consumer car buying habits. Although governments around the world have introduced several subsidies and incentives to drive the adoption of electric vehicles, traditional cars still attract a large number of consumers due to their proven technology and low purchase costs.
Second, in many European countries, the network of fuel-fueling stations is unusually well developed, making it more suitable for long-distance driving with conventional cars, while the coverage and convenience of EV charging facilities are still improving. In addition, a large number of internal combustion engine vehicles continue to circulate in the used car market, providing support for the internal combustion engine to maintain its dominance in the market.
In the process of promoting vehicle electrification, European countries are facing a huge game between policy and market reality. Although the European Union has introduced strict carbon emission regulations and plans to stop selling new combustion engine vehicles by 2035, it will still take a lot of time and resources to completely move away from traditional internal combustion engines. Especially in some economically underdeveloped regions, the high cost of electric vehicles and the lack of charging piles have limited the market acceptance of electric vehicles.
In addition, automakers face the daunting task of technological transformation. Although many European car brands, such as Volkswagen and BMW, have invested in the development and production of electric vehicles on a large scale, the sales of their traditional fuel vehicles are still the main source of profits. In the face of increasingly stringent emission standards, automotive companies need to meet the current market demand and focus on the future electrification layout, which makes the transformation of the entire industry more complex and difficult.
While internal combustion engine vehicles still dominate, there's no denying that the adoption of electric vehicles is accelerating. According to the European Automobile Manufacturers Association, electric vehicles will already account for about 20% of new car sales in 2023, and the proportion is even higher in some environmentally conscious countries, such as Norway and Netherlands. Governments around the world are encouraging consumers to choose greener ways to travel through subsidies, tax breaks, and low-emission zone policies.
At the same time, with the advancement of technology, the range of electric vehicles is increasing, the charging time is gradually shortening, and the cost of batteries is also decreasing. These factors will help electric vehicles gradually increase their market share in the coming years. However, given the current large number of cars in Europe, it may still be decades before internal combustion engine vehicles are completely replaced.
The data also shows that Europe continues to rely on conventional engines for passenger aircraft power. The CFM56 still accounts for nearly 60% of all narrow-body airliner flights in Europe, and a large number of Boeing 737NG and Airbus A320 family "classic" aircraft are powered by CFM56. Interestingly, from January 2023 to July 2024, the CFM56 narrowbody fleet in service in Europe increased by just over 100 aircraft. This is partly due to the difficulty of getting new aircraft from aircraft manufacturers, and partly because problems with GTF engines mean that operators may have new aircraft, but sometimes there are not enough engines to power them.
The V2500, another conventional engine, has also increased by just over 50 aircraft in service, which is also related to the lack of supply of next-generation powered aircraft. The V2500 has maintained a market share of around 14%, even with a slight increase in the size of its fleet.
The market share of the new generation of engines is slowly increasing. The number of aircraft in service has risen and now includes an additional 300 Leap-powered aircraft and more than 120 GTF-powered aircraft. As a result of the durability issues associated with the GTF mentioned above, its share of flights dropped from 10.5% to just over 9% even as the number of aircraft increased. Pratt & Whitney said that the first quarter of 2024 is expected to be the peak in the number of grounded aircraft, but it could actually be the second quarter of 2024, with the GTF fleet going through a period of plateau as engines are serviced in the workshop, after which market share should increase as the aircraft start flying again.