Abrupt end to the e-car premium to be put to the test

The last word has apparently not yet been spoken on the immediate end of the purchase subsidy for electric cars. SPD parliamentary group vice-chairman Wiese makes it clear: the agreement reached by the federal government is not yet an agreement on the federal budget - that is for the Bundestag to decide.

Dirk Wiese, deputy leader of the SPD parliamentary group, would like to reopen and renegotiate the budget compromise reached by the coalition leaders in the Bundestag debates. This mainly concerns the abrupt end to the e-car purchase subsidy and the tax relief for agricultural diesel. "Here, too, we want to take another look because this naturally represents a loss of confidence for many," said Wiese on Deutschlandfunk radio.

With regard to the e-car premium, he suggested: "I think it would be worth reconsidering whether to phase it out and give those who have already applied for it and factored it into their purchase decision the opportunity to do so." However, it is clear: "If we now reverse something with the environmental bonus, or possibly reverse something with the agricultural diesel, then it will have to be cut elsewhere. That is the challenge we are now facing."

With regard to the compromise that Federal Chancellor Olaf Scholz, Vice Chancellor Robert Habeck and Finance Minister Christian Lindner had negotiated after weeks of wrangling, the SPD parliamentary deputy made it clear: "The political agreement is not yet the agreement on the 2024 federal budget. Because the budget is made by the German Bundestag. And that is why we will now look at all the proposals along the way until the 2024 federal budget is finally agreed at the end of January."

Consumer advocates only welcome the end in principle

The German government did not hesitate for long with the planned earlier end to the state purchase premium for electric cars and discontinued the environmental bonus at the weekend. Since Monday, 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 Economics and Climate Protection on Saturday. Grants that have already been approved are not affected and will be paid. Applications received by 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 earlier if the funds are used up.

The German Federation for the Environment and Nature Conservation now believes the ball is in the car industry's court. BUND transport expert Jens Hilgenberg said that German companies are currently refusing to provide "affordable e-cars for the masses". The ADAC had also complained that there were only three vehicles under 30,000 euros available on the German market. Hilgenberg said that BUND generally welcomes the abolition of flat-rate purchase premiums for electric cars, which are financed with taxpayers' money. Around 10 billion euros of taxpayers' money had been spent in recent years.

The consumer associations had also 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. In the long term, however, the market ramp-up cannot be financed at the expense of taxpayers. "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.

SPD parliamentary group calls for "realistic transition periods"

The ADAC also criticized the procedure of only making the funding 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.

The SPD parliamentary group is generally in favor of the premature expiry of the subsidy. However, three deputy leaders of the SPD parliamentary group said: "However, we find the funding stop on December 17 announced at short notice on Saturday extremely unfortunate." Climate Protection Minister Robert Habeck must organize a more reliable transition. The parliamentary group leaders 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 have ordered their e-vehicles on the assumption that the subsidy amount will flow," 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."

Lindner: There was never a funding guarantee

Finance Minister Christian Lindner 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 subsidy guarantee, but the expiry was clear."

In order to boost sales, the then German government decided on a purchase premium in 2016. According to the Ministry of Economic Affairs and Climate Protection, 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 approved for 820,000 vehicles.

Money in the pot was probably already in short supply

The Ministry of Economic Affairs rejected criticism of the quick end on Sunday. "We know that it is an unfortunate situation for those who had hoped for the funding. 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 Deutsche Presse-Agentur, 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 if applications had not increased.

Industry expert Ferdinand Dudenhöffer said: "In our opinion, the budget crisis is driving the car industry in Germany into an electric car crisis." 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.