Market Context & Rationale

Italy has one of the lowest battery-electric vehicle (BEV) adoption rates in the EU, at only around 6 % of new car sales in June 2025, compared to more than 15 % across the Union. The country’s overall new car market is also struggling, with registrations dropping by 17.4 % in June and falling 3.6 % year-to-date. BEV sales in particular declined by over 40 % year-on-year in June, highlighting the urgency for action.

New Incentive Scheme

To reverse this trend, Italy launched a €600 million subsidy package under its National Recovery and Resilience Plan. Key features include:

• Private households: up to €11,000 support for those with an ISEE (Equivalent Economic Situation Indicator) of €30,000 or less, and up to €9,000 for ISEE between €30,000–40,000.
• Micro-enterprises: up to 30 % of the purchase price, capped at €20,000 per vehicle.
• Eligibility is conditional on scrapping an internal combustion engine vehicle up to Euro 5 standard.
• A new digital platform will be opened in September 2025 to streamline applications for dealers and consumers.
• The government targets at least 39,000 zero-emission vehicle purchases by June 2026.

Market Response & Trends

Consumer response to incentives has historically been strong, with previous schemes fully subscribed within hours. In early 2025, BEV registrations grew by more than 80 % compared with the same period in 2024, reaching nearly 30,000 units by April, though market share remained modest at around 5 %. July 2025 showed renewed momentum, with plug-in vehicles capturing over 12 % of the market, driven by both BEVs and PHEVs.

At the same time, hybrids continue to dominate the Italian market, holding more than 44 % share year-to-date with over 370,000 units registered by July. Petrol cars still account for about a quarter of the market, while diesel has slipped below 10 %.

Strategic and Industrial Implications

For Italy’s domestic auto industry, and particularly Stellantis, the new incentives are critical. Fiat’s 500e, produced in Turin, has struggled with weaker demand in recent months. Ensuring a healthy BEV market is seen as essential to protect local jobs and sustain national production. Italy has also been vocal at the EU level, calling for more flexibility in the 2035 phase-out of internal combustion engine vehicles and seeking additional support for battery production and hydrogen technologies.

Relevance for EAFO Stakeholders

Italy’s new €600 million EV incentive package is an important case of how recovery funding can be channelled into boosting zero-emission mobility. The program’s focus on low-income households and small enterprises reflects a social equity dimension that could inspire other Member States. While early signs suggest consumer demand is responsive, long-term success will depend on aligning incentives with industrial policy and expanding charging infrastructure.

Views and opinions expressed are those of the author(s) and do not reflect those of the European Commission.