The battery-electric driven Jaguar I-Pace has claimed the title this year, beating out the conventionally-powered Alpine A110.
The annual competition is adjudicated by seven European automotive magazines, with a jury comprised of 60 automotive journalists from 23 countries.
Jury voting resulted in a tie – a first for the competition, with the winner decided by the number of first-place allocated by judges to each vehicle.
The I-Pace received 18 votes, two more than the Alpine A110, securing the victory for British automaker for the first time.
Jaguar design boss Ian Callum said: "Why are people still surprised that electric cars win these awards? This is the future. We'd better all accept that."
He added: "This was a wonderful car for the team to design and work on, because it's a unique new car on a unique platform. For me, after 40 years in the business, this is the most exciting car I've ever had the chance to work on."
“I think jury members are quite excited about having a luxury SUV, electric vehicle with a sporty look,” said jury president Frank Janssen of the German weekly Stern. “It’s the first electric vehicle from a European premium manufacturer that can take up with Tesla.”
The all-electric I-Pace finished first in a field of mostly conventionally-powered competitors, such as Kia Ceed, The Ford Focus and Citroen C5 Aircross.