Abrupt end to e-car subsidies

After the budget ruling - Abrupt end to e-car subsidies

The German government did not hesitate for long with the planned earlier end of the state purchase bonus for electric cars and discontinued the environmental bonus at the weekend. As of December 17, 2023, no new applications for the environmental bonus can be submitted to the Federal Office of Economics and Export Control (Bafa), as announced by the Ministry of Economic Affairs and Climate Protection in Berlin on Saturday. Grants that have already been approved are not affected and will be paid. Applications received by the Bafa up to and including December 17, 2023 will be processed in the order in which they are received.

Last Wednesday, the traffic light coalition of the SPD, Greens and FDP reached an agreement on how to plug billions of euros in gaps following the Federal Constitutional Court's budget ruling. This affects the core budget as well as the Climate and Transformation Fund (KTF), which is also used to finance subsidies for e-cars. According to the ministry, the e-car subsidy was originally due to expire at the end of 2024 - or before, if the funds are used up.

Ordered cars fall out

The consumer associations had welcomed the earlier end of the purchase premiums in principle. "Purchase premiums were important in the short term to boost the spread of electric cars," said the federal association's mobility expert, Marion Jungbluth, to the German Press Agency. In the long term, however, the market ramp-up cannot be financed at the taxpayer's expense. "However, it must be ensured that at least everyone who has already ordered their e-vehicle in reliance on the subsidy receives a bonus." To achieve this, the federal government must make the date of purchase the decisive factor.

The ADAC also criticized the procedure of only making the subsidy commitment at the time of registration instead of at the time of purchase. For consumers who had ordered an e-vehicle but were unable to register it before 17 December, the decision was particularly bitter because they had factored in the environmental bonus.

Demand for a reliable transition

The SPD parliamentary group stands by the premature expiry of the subsidy. "However, we feel that the funding stop on December 17, which was announced at short notice on Saturday, is extremely unfortunate," three deputy SPD parliamentary group leaders told dpa. Climate Protection Minister Robert Habeck (Greens) must organize a more reliable transition. Parliamentary group deputies Detlef Müller, Matthias Miersch and Verena Hubertz explained: "Citizens expect realistic transition periods from political decision-makers. When buying a new car, most people have to calculate very carefully how they can afford it and have certainly factored in the premium."

The German Association of the Motor Trade (ZDK) also criticized the abrupt end of the subsidy. "This is an incredible breach of trust for tens of thousands of customers who ordered their e-vehicles on the assumption that the subsidy would be paid," said ZDK President Arne Joswig according to a press release. "The minimum would be to let the environmental bonus run until the end of the year and at the same time, in coordination with the federal states and local authorities, ensure that registration offices remain open until December 31, 2023 so that registrations can be made."

Finance Minister Christian Lindner (FDP) said on the ARD program "Bericht aus Berlin" on Sunday evening that it had always been clear that the environmental bonus would expire at some point. There was no fixed end date for the subsidy. "In this respect, there was never a funding guarantee, but the expiry was clear."

Subsidy introduced in 2016

In order to boost sales, the then German government decided to introduce a purchase premium in 2016. According to a statement from the Ministry of Economic Affairs and Climate Protection on Saturday, around ten billion euros have since been paid out for around 2.1 million electric vehicles. The subsidy program has been very successful and has decisively advanced electric mobility in Germany.

According to Bafa, around 376,000 applications for electric vehicles have been received so far this year and 2.4 billion euros have been paid out. The number of vehicles applied for has fallen compared to 2022. This is due to the fact that since January 1, 2023, only battery and fuel cell-powered vehicles have been eligible for funding and no longer hybrid vehicles. In addition, since September 1, only private individuals have been able to apply for the environmental bonus. In 2022, 3.4 billion euros were still approved for 820,000 vehicles.

Money already in short supply

The Ministry of Economic Affairs rejected criticism of the quick end on Sunday. "We know that this is an unfortunate situation for those who had hoped for the subsidy. But unfortunately this decision was necessary because there is no longer enough money available to consider applications received after Sunday," it said.

According to ministry circles, the funds for 2023 have been used up. The 209 million euros still earmarked for 2024 will probably only be sufficient if the funding ends with immediate effect. According to dpa information, around 1,400 applications are received for review every day, with an average grant of 4,000 euros. Each additional day of applications could therefore cost the taxpayer around 5.6 million euros. If applications had been stopped at the end of the year, funds of around 80 million euros would still have been needed.

Fears of a crash

The transport policy spokesman for the CDU/CSU parliamentary group, Thomas Bareiß, fears that the end of funding will cause the already sluggish sales figures for e-cars to plummet. Many people would opt for a combustion engine again in the future. The traffic light government is thus finally abandoning its goals for the transport transition. "For the German automotive industry and the more than 700,000 people it employs, this is another serious setback."

"In our opinion, the budget crisis is driving the car industry in Germany into an electric car crisis," said industry expert Ferdinand Dudenhöffer. He expects a decline of up to 200,000 electric car sales in Germany in 2024. Without subsidies, electric cars would be far too expensive for new car buyers. The ADAC complained that there are only three vehicles under 30,000 euros available on the German market. "Manufacturers must also increase the range of more affordable vehicles," said a spokeswoman.