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Germany to reduce EV subsidies in 2023

27 July 2022 - 08:58 By Reuters
Germany will reduce financial incentives to buy electric cars next year after an agreement within the governing coalition as the vehicles' growing popularity makes government subsidies unnecessary.
Germany will reduce financial incentives to buy electric cars next year after an agreement within the governing coalition as the vehicles' growing popularity makes government subsidies unnecessary.
Image: Sean Gallup/Getty Images

Germany will reduce financial incentives to buy electric cars next year after an agreement within the governing coalition, as the vehicles' growing popularity makes government subsidies unnecessary, Germany's economy ministry said on Tuesday.

The incentives, or premiums, paid to buyers of electric cars will expire completely once an allocated sum of 3.4bn (roughly R58,058,772,000) from the next two years' budget is spent, according to government sources.

"E-vehicles are becoming more and more popular and will no  longer need government subsidies in the foreseeable future," said economy minister Robert Habeck.

Under the plan, premiums for fully electric-powered vehicles priced below 40,000 (roughly R684,885) will fall to 4,500 (roughly R77,049) at the beginning of next year from 6,000 (roughly R102,732) , and fall to 3,000 (roughly R51,367) in the following year.

For cars priced more than 40,000 the premium will drop to 3,000 at the start of next year from 5,000 (roughly R85,639) .

There is no subsidy for the purchase of cars priced more than 65,000 (roughly R1,113,315), and that will apply to vehicles priced at 45,000 (roughly R771,291) and more from 2024.

Subsidies for company cars will be eliminated, 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,  something the economy minister 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.

"For the forthcoming funding phase, we are placing a clear focus on climate protection and are concentrating funding on purely battery-electric vehicles," Habeck said.

The German cabinet is expected to sign off on a draft climate action budget to provide the funding for the scheme on Wednesday.

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 more than 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 has the largest market share for electric cars in Germany at 20.3%, followed by Tesla with 11.2%, according to the latest figures from motor vehicle authority KBA.

The VDA auto association criticised the planned subsidy cuts.

"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, saying "a switch to e-mobility is needed in all fleets".


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