Germany would reduce financial incentives to buy electric cars in 2023 following a coalition agreement, as the vehicles’ growing popularity makes government subsidies unnecessary, the economy ministry said.
The incentives paid to electric car buyers will expire completely once an allotted €3.4 billion (€3.44 billion) of the budget for the next two years has been spent, government sources told Reuters. The news was also widely reported by other news agencies.
“E-vehicles are becoming increasingly popular and will no longer require government subsidies in the near future,” Economics Secretary Robert Habeck said in a statement quoted by Reuters.
Under the plan, premiums for all-electric vehicles priced below €40,000 would fall to €4,500 at the start of 2023, from €6,000 now, and fall to €3,000 the following year.
For cars with a price of more than 40,000 euros, the premium would fall from 5,000 euros at the beginning of next year to 3,000 euros.
There is no subsidy for the purchase of cars with a price of more than 65,000 euros and that would apply to vehicles with a price of 45,000 euros and more from 2024.
Subsidies for company cars would be abolished and only private consumers would benefit from the scheme.
The government would also end by the end of the year the incentives for plug-in hybrid (PHEV) cars, which the economy minister had called for over doubts about the climate qualifications of the twin motor vehicles, as they are heavier and the battery-powered mode often only covers short distances.
“For the upcoming funding phase, we are putting a clear focus on climate protection and concentrating funding on battery-powered pure electric vehicles,” Habeck said in the statement quoted by Reuters.
The German cabinet was expected to sign a draft climate action budget this week to provide funding for the scheme.
Sales of all electric cars in Germany almost doubled to 328,000 in 2021 compared to 2020, thanks in part to the scheme. There are now more than 600,000 BEVs on German roads. Including hybrids, there are over a million.
VW, Mercedes-Benz Benz and BMW have accelerated the introduction of new electrified models and are building new plants or ‘transforming’ existing plants to build them, while enclosing supplies of scarce battery raw materials from abroad.
The share of pure electric cars in new car registrations in Germany recently stood at about 14%, Reuters said.
Volkswagen has the largest market share for electric cars in Germany with 20.3%, followed by Tesla with 11.2% [and a new assembly plant in Berlin]according to the latest figures from the motor vehicle authority KBA.
According to the reports, the VDA car association criticized the planned subsidy cuts.
“In times of rising costs and burdens, the decision to unilaterally and completely cut funding is incomprehensible,” VDA chairman Hildegard Mueller said in a statement quoted by Reuters.
She also denounced the move to exclude company cars from the initiative, saying that “a switch to e-mobility is needed in all fleets”.
With the removal of the plug-in car subsidy, the UK currently remains the only major European market with no purchase incentives for private EV buyers.