(Reuters) - Global sales of fully electric and plug-in hybrid vehicles rose by a yearly 20% in August, driven by record high sales in China, and despite a 33% drop in Europe to its weakest month since January 2023, market research firm Rho Motion said on Thursday.

Rho Motion expects this year's sales in China, the world's largest EV market, to rise by one third from last year to 10.5 million vehicles, while it sees European sales roughly in line with last year's 3.1 million units, data manager Charles Lester told Reuters.

WHY IT'S IMPORTANT

Demand for electric cars has cooled in recent months after rising dramatically for several years, as consumers wait for more affordable models or opt for hybrid alternatives, leading several automakers to scale back on their electrification plans.

BY THE NUMBERS

EVs - whether fully electric (BEV) or plug-in hybrids (PHEVs) - sold worldwide reached 1.47 million in August, Rho Motion data showed.

Sales in China jumped 42% in August and reached a record high of over one million vehicles, while in the United States and Canada sales were up 8% to 0.16 million units.

Year-to-date sales in Europe dropped by 4%, weighed down by a 23% decrease in Germany after a cut of subsidies, Rho Motion said.

GRAPHICS

KEY QUOTES

Increased subsidies in China for drivers trading in more polluting vehicles helped drive the EV sales jump in August, Rho Motion's Lester told Reuters.

"Seasonal vehicle sales in China are strong towards the end of the year," he added.

CONTEXT

The German government agreed on Sept 4 to tax deductions of up to 40% for companies on their sales of electric cars, after last year abruptly ending a subsidy programme designed to help speed up the green transition.