Following an agreement inside the ruling coalition, state-funded financial incentives for purchasing electric cars in Germany will be decreased starting in 2023, according to persons familiar with the discussions.
Once a budgeted amount of 2.5 billion euros ($2.53 billion) is gone, the incentives, or premiums, granted to buyers of electric cars would fully expire, according to the government sources.
According to the plan, which was first detailed in the Handelsblatt daily, premiums for fully electric vehicles costing under 40,000 euros will decrease from 6,000 euros to 4,500 euros at the start of next year and to 3,000 euros by the end of 2023.
At the beginning of next year, the premium for more expensive cars that only use electric power will decrease from 5,000 euros to 3,000 euros. According to the sources, starting in the middle of 2023, only automobiles worth up to 45,000 euros would be eligible for payment.
Those purchasing cars for more than 65,000 euros are not eligible for a subsidy.
Company automobile subsidies disappear, and the program exclusively benefits individual consumers.
At the end of the year, the government will also completely eliminate the incentives for plug-in hybrid vehicles, a move that Green Party Economy Minister Robert Habeck had advocated due to concerns about the double-engined cars’ environmental credentials because they are heavier and frequently only operate for short distances in battery mode.
On Wednesday, the German cabinet is anticipated to approve a draft climate action budget that will support the program. The ministries of finance and economy declined to offer any comments on the incentives.
Thanks in part to the program, sales of all-electric vehicles nearly doubled to 328,000 in 2021 compared to the previous year.
Currently, there are more than 600,000 electric vehicles on German roads. In total, there are considerably over a million, including hybrids.
Recently, roughly 14% of new automobile registrations in Germany were for fully electric vehicles.
According to the most recent statistics from Germany’s motor vehicle regulator KBA, Volkswagen has a 20.3 percent market share for electric vehicles, followed by Tesla with 11.2 percent.
In a statement, the VDA car association criticized the proposed subsidy reductions.
President of the VDA Hildegard Mueller said, “In times of mounting costs and pressures, the decision to unilaterally and completely slash funding is incomprehensible.
She said that “a changeover to e-mobility is essential in all fleets” and criticized the decision to exclude company cars from the effort.
