Habeck introduces fresh incentives to promote electric vehicle adoption
The abrupt cease of the environmental incentive has led to a downturn in electric vehicle sales in Germany. The federal government now appears to be aiming to reverse this trend and boost sales. The predicament at Volkswagen might have contributed to this decision.
Economics Minister Robert Habeck has announced fresh tax cuts for electric vehicles. "We're currently working on additional tax cuts for electric cars as part of the growth initiative," the Green politician explained. Sources from the Economics Ministry suggest that the cabinet will discuss this as early as tomorrow. "The automotive industry is a key component of Germany's industrial base and we want to keep it that way." Major automakers and their suppliers provide employment for tens of thousands of people, stimulate growth in various regions, and drive innovation across industries.
Regarding Volkswagen's situation, Habeck stated that "business decisions like the ones currently under discussion" should be made "in the interest of this responsibility". He urged VW to make decisions in close consultation with labor unions.
The core brand VW announced a tighter austerity plan the previous day after a management meeting and no longer ruled out plant closures and layoffs. CEO Oliver Blume attributed this to the challenging situation in the European car market and the decreased competitiveness of German production sites.
"The Union has little understanding of future viability"
Habeck explained that the transformation efforts for the automotive industry are "currently massive". German car manufacturers must compete globally. "A key location factor is also long-term planning security" - such as that promised by the EU requirement that only CO2-neutral vehicles may be newly registered from 2035 onwards.
"Those who, like Friedrich Merz and Markus Söder, advocate withdrawal, are losing credibility and demonstrate a poor understanding of future viability," Habeck criticized, referring to the leaders of the CDU and CSU. A flip-flop strategy is harmful and has already caused significant uncertainty in investments in the supply chain. "Only China benefits from this, further expanding its technological development."
The federal government has been promoting electric mobility for years. "We will continue to support the transformation with measures on both the demand and supply side," promised Habeck.
E-car registrations are plummeting
Electric car registrations have been declining in Germany for several months - in July, around 30,100 E-cars were registered, a third less than the previous year. The market share of pure electric vehicles was thus just under 13 percent.
One reason is the cessation of public funding for electric car purchases last year. The traffic light coalition surprisingly and suddenly eliminated the environmental bonus. This had most recently amounted to 4,500 euros for a net list price of the car's basic model of 40,000 euros and 3,000 euros for a net list price of over 40,000 euros to 65,000 euros.
The state subsidies for the purchase of climate-friendly electric vehicles had previously been funded from the Climate and Transformation Fund (KTF). However, the Federal Constitutional Court withdrew 60 billion euros from the KTF. Up to that point, around 10 billion euros had been paid out for around 2.1 million electric vehicles within the framework of the environmental bonus since 2016, according to ministry figures.
Further reasons for the current slump in sales are the high prices. The increasing calls from politics for a shift away from the planned 2035 combustion engine phase-out are also causing additional uncertainty among consumers.
The federal government's new plan includes fresh tax cuts for electric vehicles, aiming to boost their manufacturing and sales, recognizing their importance to Germany's industrial base and innovation. Despite Volkswagen's challenging situation, Economics Minister Robert Habeck emphasized the need for the core brand to make informed decisions in the interest of the industry's future viability.
