Germany to cut electric car subsides in 2023, sources say

Tesla cars are seen parked at the construction site of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 20, 2022. REUTERS/Hannibal Hanschke/File Photo

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BERLIN, July 26 (Reuters) – State-funded financial incentives to buy electric cars in Germany will be reduced next year after an agreement within the governing coalition, people familiar with the discussions told Reuters.

The incentives, or premiums, paid to buyers of electric cars will expire completely once an assigned sum of 2.5 billion euros ($2.53 billion) is spent, according to the government sources.

Under the plan, first reported in the Handelsblatt newspaper, premiums for purely electric-powered vehicles priced below 40,000 euros ($40,488) will fall from 6,000 euros currently to 4,500 euros at the beginning of next year, and to 3,000 euros over the course of 2023 .

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The premium available for more expensive cars that run purely on electric power will drop to 3,000 euros at the start of next year from 5,000 euros currently. From mid-2023 this will only be paid out for vehicles valued at up to 45,000 euros, the sources said.

There is no subsidy for people buying cars at a purchase price of over 65,000 euros.

Subsides for company cars fall away, with only private consumers benefiting from the scheme.

The government will also axe incentives for plug-in hybrid cars at the end of the year entirely – something which Economy Minister Robert Habeck of the Greens had advocated due to doubts over the double-engined vehicles’ climate credentials as they are heavier and the battery -powered mode often lasts for only short distances.

The German cabinet is expected to sign off on a draft climate action budget to provide the funding for the scheme on Wednesday. The finance and economy budgets declined to comment on the incentives.

Sales of all-electric cars almost doubled to 328,000 in 2021 compared to the previous year, thanks in part to the scheme.

There are now over 600,000 electric-powered vehicles on German roads. Including hybrids, there are well over a million.

The share of purely electric cars in new car registrations in Germany recently came in at around 14%.

Volkswagen (VOWG_p.DE) has the largest market share for electric cars in Germany at 20.3%, followed by Tesla (TSLA.O) with 11.2%, according to the latest figures from motor vehicle authority KBA.

The VDA auto association criticizing the planned subsidy cuts in a statement.

“In times of rising costs and burdens, the decision to unilaterally and comprehensively cut funding is incomprehensible,” VDA President Hildegard Mueller said.

She also slammed the move to exclude company cars from the initiative, adding that “a switch to e-mobility is needed in all fleets.”

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Reporting by Markus Wacket and Victoria Waldersee; Writing by Maria Sheahan and Rachel More; Editing by Jan Harvey and Josie Kao

Our Standards: The Thomson Reuters Trust Principles.


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