Overview

The automotive sector remains a strategic pillar of Portugal’s economy, comprising 35,000 companies engaged in vehicle and component manufacturing. It generates approximately 167,000 direct jobs, accounting for 3.5% of national employment, and produced a business volume of $46 billion (€42.6 billion) in 2024, contributing 17.8% of total fiscal revenues. The sector represents 12.6% of Portugal’s total exports, underscoring its importance in international trade. In 2024, the automobile market experienced a robust 16.4% growth, driven by rising consumer demand, electrification trends, and renewed investment across the supply chain. Portugal hosts over 220 automotive supplier companies and four major vehicle manufacturers: Toyota/Salvador Caetano, Stellantis Mangualde (formerly PSA Peugeot Citroën), Mitsubishi Fuso Trucks, and Volkswagen AutoEuropa, which alone accounts for over 70% of national vehicle production. Public programs such as Interface and Indústria 4.0 continue to provide targeted incentives to support innovation, digital transformation, and competitiveness within the sector.

Automobile exports remain a cornerstone of Portugal’s economy, supported by a strong reputation for producing high-quality vehicles. In 2024, Portugal exported 97% of its total vehicle production, amounting to 332,546 units, reinforcing its role as a key player in global automotive trade. This success is underpinned by the country’s strategic location, advanced manufacturing capabilities, skilled workforce, and a robust framework of fiscal and regulatory incentives. Beyond the major assembly plants operated by Volkswagen AutoEuropa, Stellantis Mangualde, Toyota/Salvador Caetano, and Mitsubishi Fuso, Portugal hosts over 220 small and medium-sized enterprises specializing in automotive components, many of which supply international markets.

To foster continued investment, the Portuguese government has expanded its support for foreign companies through targeted programs such as Mobilidade Verde and Indústria 4.0, offering subsidies for zero-emission vehicle production and digital transformation initiatives. As the global automotive industry accelerates toward electrification and sustainable mobility, Portugal is actively aligning with these trends. Domestic factories are prioritizing the production of electric vehicles and investing in research for sustainable technologies, positioning the country to capture emerging export opportunities in the fast-growing EV market.

Most passenger cars manufactured in Portugal continue to be exported, maintaining the country’s strong position in global automotive trade. In 2024, exports accounted for 97.7% of total vehicle production, with a total value of approximately $4.95 billion, making cars the top exported product from Portugal and placing the country among the top 30 global car exporters. Europe remains the dominant destination, absorbing 87.6% of Portuguese vehicle exports, with Germany (23.7%), Italy (13.8%), France (10.8%), Spain (9.9%), and the United Kingdom (8.4%) as leading markets. Emerging destinations such as Turkey, Algeria, and Morocco have shown notable growth, with Algeria now accounting for 3.2% of exports and Morocco increasing its share by 26.1% year-over-year.

In the automotive parts and accessories segment, Portugal exported approximately USD 3.32 billion in 2023, with a slight decline to $3.27 billion in 2024, reflecting broader challenges in the European automotive supply chain3. Despite this dip, the sector remains vital, representing 14.9% of Portugal’s total goods exports. Europe continues to dominate as the primary destination, accounting for 88.5% of component exports. Key markets include Spain (28.3%), Germany (23.4%), France (8.4%), United Kingdom (4.9%), and Romania (2.1%). Outside Europe, Morocco and the United States have shown strong growth, with Morocco’s share rising significantly in 2024 and the U.S. now representing 4.9% of exports. 

Statistical information for the year 2024 confirms the importance that exports represent for the automotive sector since 97.9% of the vehicles manufactured in Portugal are exported to foreign markets. This contributes significantly to the Portuguese trade balance. The automotive sector englobes, passenger cars, SUVs, commercial vans, trucks, busses, motorcycles, bicycles (of which Portugal is the largest manufacturer in Europe) and components, parts and accessories. The automotive components industry has grown 200% over the past 15 years and presently, Portugal is supplying carmakers with batteries, glass, plastic molds, interiors, tires, metal works, cables and harnesses, car seats, and electronics.  

The automotive components industry is a steadily growing contributor to employment and GDP growth.  In 2024 Portugal, with around 350 companies employed over 63,000 people and exported 85% of the produced components. In 2024, the latest statistics available registered an annual turnover of approximately 15 billion euros, representing 5.6% of the country’s GDP. It also represents 8.9% of manufacturing industry employment and is one of the leading exporting sectors in Portugal, with 16.5% of all tradable goods.

In addition, recent data from José Couto, president of the Portuguese Manufacturers Association for the Automotive Industry (AFIA), highlights that the automotive components sector has reached a share of 17% of tradable goods exports, with cumulative exports in the first two months of 2024 reaching $2.37 billion (€2.2 billion), representing a 2.8% increase compared to the same period in 2023. By region, Europe accounts for 89.4% of exports, while the American continent shows a growth of 20.9% in the first two months of the year compared to 2023, accounting for 5.6% of Portuguese automotive components exports. 

The automotive sector overall, is responsible for almost 8.5% of Portugal’s industry and 2.1% of the production of the Portuguese economy. It employs 0.7% of the population and accounts for 4.8% of the manufacturing industry. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 0.66%, resulting in a projected market volume of $4.89 billion and Passenger Cars market unit sales should reach 84.80k by/in 2027. 

Market Entry

The most effective way to enter the Portuguese market is to partner with a local company that can act as a local representative and provides insights about the local market environment and trends.  

Barriers 

The mandatory European approval and certification process can be challenging for U.S. vehicles and parts as they must meet European specifications when exporting to Portugal.  There are no customs duties on imports from European Union (EU) countries. The VAT in Portugal is 23%.  The VAT applies to all imports, including European and local suppliers.

Current Market Trends and Demand

Motorcycles

In Portugal, the motorcycle market is projected to generate $507.33 million in revenue by the end of 2025, reflecting strong consumer demand and a growing preference for two-wheeled mobility. The market is expected to grow at a compound annual rate of 4.68% between 2025 and 2030, reaching approximately $637.61 million by 2030. Unit sales are forecasted to hit 43,770 motorcycles in 2025, with a projected increase to 54,200 units by 2030. The On-road Motorcycles segment remains dominant, with a projected market volume of $397.40 million in 2025, accounting for nearly 78% of total revenue. The volume-weighted average price of motorcycles in Portugal is expected to be $11,590 in 2025.

Honda Motorcycles continues to lead the market, holding a 33.0% share of unit sales and 31.3% of market value in 2025, reinforcing its position as the top brand in Portugal. U.S. motorcycle brands such as Harley-Davidson, Buell, and Polaris/IPS are present but operate at a smaller scale, primarily targeting niche segments and premium buyers.

Portuguese consumers are increasingly turning to motorcycles and scooters as practical and cost-effective alternatives to cars, especially in urban areas. The 2023 market structure by segment showed On-road motorcycles generating $268.60 million from 19,820 units, Off-road motorcycles contributing USD 40.46 million from 5,180 units, and Scooters accounting for $24.06 million from 3,530 units. These trends are expected to continue, with electric motorcycles gaining traction among environmentally conscious buyers.

Electric Vehicles and Hybrid Vehicles

According to ACAP and Stellantis reports, Stellantis (the automaker that emerged from the merger of France’s Groupe PSA and U.S.-Italian Fiat Chrysler Automobiles), controlling brands such as Fiat, Peugeot, Opel, Citroën, Maserati, and Jeep, continues to dominate the Portuguese market. In 2024, Stellantis solidified its position as the domestic market leader with a 44.6% share in the light commercial vehicle (LCV) segment, making Portugal one of the strongest-performing markets for the group. Peugeot continues to shine as the favorite brand among Portuguese consumers, leading in passenger car sales and achieving a 25.4% share in the light commercial vehicle market. In November 2024, Peugeot 2008 was the best-selling model in Portugal.
On a broader scale, Stellantis maintained its overall leadership in the EU29 Commercial Vehicle market with a 30.4% market share in November and 29.4% year-to-date (YTD). Stellantis also recorded significant growth in electric vehicle (EV) performance, achieving a 12.5% market share YTD in the EU29 BEV market. Notably, Peugeot led the EV market in France with a 34.7% share, with the Peugeot E-208 being the best-selling electric vehicle in the region. These achievements underscore Stellantis’s strong commitment to providing environmentally friendly and accessible mobility solutions.

BYD (Build Your Dreams), the largest Chinese manufacturer of electric vehicles, first entered the Portuguese market in 2019 with the delivery of eight fully electric 12-meter buses to the Coimbra Municipality, marking its initial presence in public transport. In May 2023, BYD officially launched its passenger vehicle operations in Portugal through a strategic partnership with the Salvador Caetano Group, introducing three 100% electric models: the compact SUV BYD Atto 3, the seven-seater SUV BYD Tang, and the premium sedan BYD Han. From May to September 2023, BYD sold 155 electric vehicles, establishing its foothold in the consumer market.
Since then, BYD has experienced rapid growth. By August 2025, it became the top-selling brand of fully electric passenger vehicles in Portugal, with 2,913 units sold between January and August—a 93.7% increase compared to the same period in 2024. In May 2025, BYD led monthly EV sales for the first time, registering 441 units and capturing a 9.8% market share. The brand now offers a broader lineup, including the BYD Dolphin Surf, BYD Sealion 7, and BYD Atto 2, and is widely recognized as one of Tesla’s strongest competitors in the 

Portuguese EV market.

Tesla has firmly established its presence in the Portuguese market since officially entering in January 2017. In 2024, Tesla was the top-selling electric vehicle brand in Portugal, registering 9,760 new units, a 4.6% increase over the previous year2. The brand’s dominance was driven by strong consumer demand for models like Model Y and Model 3, which consistently ranked among the best-selling BEVs nationwide. While Tesla experienced a 26.7% drop in registrations during the first four months of 2025, this reflects broader market adjustments rather than a decline in brand relevance.

Electric vehicle adoption in Portugal continues to accelerate. In 2024, sales of 100% battery electric vehicles (BEVs) rose by 14.7% year-over-year, totaling 41,741 units, while plug-in hybrids (PHEVs) added another 28,346 units, bringing combined EV registrations to 70,087, a 10.3% annual increase. BEVs captured 19.9% of the light passenger vehicle market by year-end, underscoring their growing appeal as cost-effective and environmentally responsible alternatives to combustion engines.

In 2025, the Portuguese government expanded its electric vehicle incentives under the Environmental Fund to further accelerate the country’s transition to clean mobility. Individuals purchasing a new 100% electric passenger car can now receive up to $4,320 (€4,000), provided the vehicle meets price eligibility criteria—typically under $41,580 (€38,500), or $59,400 (€55,000) for larger models with more than five seats. Social institutions and municipalities benefit from even higher support, up to $5,400 (€5,000), especially when scraping older fossil-fuel vehicles. For businesses and professional users acquiring electric light goods vehicles, the incentive remains at $6,480 (€6,000) per unit, with a cap of four vehicles per applicant. The program also includes support for electric motorbikes, cargo bikes, and city-use bicycles, as well as subsidies for installing EV chargers in apartment buildings. Applications are open until November 30, 2025, or until the allocated budget of $ 14.58 million (€13.5 million) is exhausted—a 35% increase from the previous year, reflecting Portugal’s growing commitment to sustainable transport.

Table: Monthly motor vehicle registrations in Portugal from January to August for both 2024 and 2025, including battery electric vehicles (BEVs) and their year-over-year percentage change. The data reflects new registrations only and is based on the latest available sources.   

Note: Figures for 2025 are provisional and rounded based on available reporting. BEV data includes new passenger vehicles only. 

Achieving carbon neutrality by 2035 remains a central goal of the European Commission, which mandates that all new cars sold in the EU from that year onward must be zero-emission vehicles. In alignment with this objective, the Portuguese government is developing a national Carbon Neutrality Roadmap and has begun integrating low- and zero-emission vehicles into public transport fleets. The target is for all urban bus fleets to be fully zero-emission by 2034.

This transition has accelerated the growth of Mobi.E, Portugal’s National Electric Mobility Network, designed to ensure universal access to public EV charging. As of July 31, 2025, the network includes 6,673 charging stations and 12,423 charging points, excluding Tesla’s proprietary Superchargers. The total installed power capacity now exceeds 419,139 kW, reflecting Portugal’s commitment to expanding clean mobility infrastructure.
In parallel, Tesla Portugal has ramped up its Supercharger network expansion, following the EU’s Alternative Fuels Infrastructure Regulation (AFIR). Under this regulation, Tesla chargers are now open to all EV brands, ending their previous exclusivity. Expansion had previously stalled due to a misinterpretation of Portuguese law requiring integration with the Mobi.E platform. Tesla declined to join Mobi.E, citing incompatibility with its global charging model. However, the approval of Decreto-Lei 10/2024, Portugal’s new Electric Mobility Regulation, removed this requirement, enabling Tesla to proceed with new station openings in Lisbon and other major cities. Mobi.E is expected to be phased out by 2026, streamlining the EV charging landscape and encouraging broader infrastructure investment.

In 2024, the European car market continued its transition toward electrification, though overall growth was more modest than the previous year. Passenger car sales across the EU, EFTA, and UK reached approximately 10.3 million units, reflecting a slight contraction of 0.9% compared to 2023. Battery-electric vehicles (BEVs) strengthened their position, capturing a 17% market share in the first half of 2025, up from 14% in 2024 and 14.6% in 2023. BEV registrations rose by 24.9% year-on-year, totaling 1.19 million units in the first half of 2025 alone. Hybrid-electric vehicles (HEVs) remained the most popular powertrain, accounting for 34.7% of new car sales, while plug-in hybrid electric vehicles (PHEVs) rebounded with a 24.8% increase, reaching an 8.6% market share, up from 7.7% in 2023.

Meanwhile, diesel vehicles continued their decline, falling to just 9.5% of the market by mid-2025, while petrol-powered cars dropped to 28.2%, reflecting a broader shift away from internal combustion engines. These figures underscore the accelerating momentum of electric and hybrid vehicles in Europe’s push toward sustainable mobility, supported by regulatory targets, expanding infrastructure, and growing consumer demand.

Aftermarket Accessories

Portugal’s aftermarket automotive accessories sector continues to grow steadily, fueled by rising vehicle ownership, electrification trends, and a strong consumer appetite for customization and tech upgrades. While the market remains smaller than neighboring Spain, it is shaped by a network of small and mid-sized importers and increasingly supported by e-commerce platforms, retail chains, and OEM service networks. Portugal’s openness to innovation and high standards for quality make it an ideal environment for product validation and market testing, offering strategic access not only to the broader European Union but also to Portuguese-speaking markets in Africa and South America.

Acceptance of U.S.-made products is consistently high, particularly in categories such as passive and active safety systems, eco-friendly upgrades, diagnostic and testing tools, and in-vehicle entertainment systems. American companies like Snap-on Tools, Magna International, Dana Incorporated, 3M Automotive, WeatherTech, Garmin, and K&N Engineering have established a solid presence in Portugal, either through direct distribution or partnerships with local firms. Their products, ranging from GPS units and OBD-II scanners to premium floor mats and performance air filters, are widely available through authorized dealers, aftermarket retailers, and online platforms such as Norauto, AutoDoc, and domestic e-commerce sites.

Popular accessory categories include interior enhancements like infotainment systems and ambient lighting; exterior upgrades such as body kits and roof racks; electronic components including dash cams and EV-compatible lighting; and eco-friendly solutions like solar-powered parts and low-emission exhaust systems. Portuguese consumers and businesses show a clear appetite for innovation, with products offering unique features, advanced connectivity, or sustainability benefits performing well - even at premium price points. As the automotive sector aligns with EU-wide goals for electrification and digitalization, Portugal offers fertile ground for U.S. companies to pilot new solutions, build brand recognition, and scale across Europe.

Evolving Trends in Portugal’s Automotive Market: Engines, Segments & Fuel Shifts

Portugal’s automotive industry is undergoing a significant transformation, shaped by evolving consumer preferences, regulatory pressures, and technological innovation. One major trend is the continued popularity of smaller engines, particularly 3-cylinder models under 1000cc. These compact engines are widely used in Europe’s best-selling vehicles as manufacturers aim to meet EU emissions targets while keeping production and retail costs competitive. This strategy allows brands to integrate advanced features without inflating prices, making high-tech vehicles more accessible to Portuguese consumers.

Meanwhile, small SUVs remain one of the fastest-growing segments in Portugal. In 2024, revenue from this category reached approximately $1.6 billion, with unit sales projected to exceed 43,000 vehicles by 2026. This growth is driven by consumer demand for vehicles that combine comfort, safety, and practicality—especially as manufacturers introduce new digital interfaces, ADAS systems, and electrified powertrains into compact SUV models.

Fuel type preferences are shifting dramatically. In 2024, gasoline-powered passenger cars accounted for 39.2% of new registrations, while diesel dropped to 11.4%, continuing its steep decline. However, diesel remains dominant in commercial fleets, powering 98.7% of new light commercial vehicles and over 99.6% of heavy trucks. Electrification is gaining ground: battery electric vehicles (BEVs) captured 19.9% of the passenger car market in 2024, with 41,741 units sold, while plug-in hybrids (PHEVs) added another 28,346 units, bringing total EV registrations to 70,087, a 10.3% increase year-over-year.

Hybrid configurations also saw notable shifts. Sales of electric/gasoline hybrids rose by 3.3%, reaching 8,545 units, while plug-in/gasoline hybrids grew by 1.8% to 4,653 units. Diesel-based hybrids remain marginal, with 883 electric/diesel hybrids sold (+0.3%) and 1,145 plug-in/diesel hybrids (+0.4%). Altogether, plug-in and hybrid vehicles increased their market share to 8.5%, reflecting Portugal’s gradual transition toward low-emission mobility.

The industry is broadly divided into three key sub-sectors: motor vehicles (including tractors), parts and accessories, and chassis/bodywork including trailers and semi-trailers. Motorcycles form a distinct and growing category, especially in urban mobility. U.S. exporters remain competitive in Portugal, particularly in the aftermarket and specialty equipment space, though they face strong competition from European and Chinese suppliers. American brands are well-positioned due to their reputation for innovation, quality, and advanced technology—especially in areas like diagnostics, electrification, and safety systems.

Opportunities

Electric Drive Vehicles 

Portugal is fully aligned with the European Commission’s ambitious goal to reduce CO₂ emissions from new cars to zero by 2035, effectively phasing out gasoline and diesel vehicles across the EU. Backed by a $21.6 billion (€20 billion) incentive program approved by the European Commission, this transition is accelerating demand for zero-emission vehicles and related technologies. The Portuguese government strongly supports this initiative and is actively modernizing its automotive sector to meet future market needs.

For U.S. suppliers, this presents significant opportunities in electric vehicle components such as high-efficiency motors, power electronics, and lightweight materials. There is also growing demand for fast-charging infrastructure, smart grid integration, and fleet electrification solutions for municipalities and logistics providers. Additionally, U.S. companies offering advanced vehicle software, such as ADAS platforms, cybersecurity systems, and over-the-air update capabilities—are well-positioned to support Portugal’s evolving mobility landscape.

Mobility Applications

The country has embraced mobility-as-a-service (MaaS) platforms, with apps like Uber, Bolt, and Cabify thriving in urban centers. The use of mobility applications is expanding rapidly, especially in Lisbon and Porto, where electric scooters, shared bikes, and ride-hailing services are increasingly integrated into daily transport routines. This shift reflects a broader trend toward flexible, low-emission urban mobility.

U.S. companies specializing in app development, fleet management software, and real-time data analytics have strong prospects in Portugal. There is growing interest in connected vehicle technologies, including V2X communication systems and IoT-enabled mobility devices. Additionally, U.S. firms offering EV fleet services—such as leasing, maintenance, and battery-as-a-service models—can tap into the expanding ride-hailing and last-mile delivery sectors.

Batteries & Energy Storage

Portugal is positioning itself as a European hub for battery innovation, anchored by the Batteries 2030 initiative and the creation of BatPower—the Portuguese Battery Cluster—launched in 2023 under the coordination of the International Iberian Nanotechnology Laboratory (INL). The cluster brings together 23 entities, including companies like Savannah Resources, DST Solar, Galp, Efacec, Bosch, and Prio, with the goal of building a synergistic ecosystem across the entire battery value chain.

U.S. suppliers have multiple entry points into this emerging sector. There is strong demand for advanced battery materials such as solid-state electrolytes and silicon anodes, as well as manufacturing equipment for cell production and quality control. Second-life battery solutions for stationary energy storage and grid balancing are also gaining traction. Furthermore, U.S. firms can collaborate with Portuguese research institutions on R&D initiatives focused on energy storage, lifecycle tracking, and predictive analytics. As Portugal pursues full decarbonization of its energy sector, American expertise in battery innovation and energy management is highly valued.

Key Government Regulatory Agencies

• IMT – Instituto da Mobilidade e dos Transportes
• AMT – Autoridade da Mobilidade e dos Transportes
• DGEG – Direção-Geral de Energia e Geologia
• ERSE – Entidade Reguladora dos Serviços Energéticos
• APA – Agência Portuguesa do Ambiente
• ASAE – Autoridade de Segurança Alimentar e Económica
• AICEP – Agência para o Investimento e Comércio Externo de Portugal
• UVE – Associação de Utilizadores de Veículos Elétricos

Resources 

• ACAP – Associação Automóvel de Portugal
• AFIA – Associação de Fabricantes para a Indústria Automóvel
• Mobinov – Automotive Cluster of Portugal
• BatPower – Portuguese Battery Cluster
• AEP – Associação Empresarial de Portugal,
• Observatório Automóvel
• Financial Times
• Mobi.E
• OEC