Habeck Proposes New Tax Reduction for Electric Vehicles at Government Level
Habeck underscored, "Germany's automotive sector forms the backbone of our industrial base, and we want to preserve this status quo." Major automakers and their suppliers provide jobs for tens of thousands of workers, fuel economic growth in various regions, and drive innovation across numerous industries.
Addressing the situation at Germany's leading automaker, Volkswagen, the economics minister emphasized that ongoing business decisions should be made "in light of this responsibility." He urged Volkswagen to work closely with social partners in making these decisions.
On Monday, the core Volkswagen brand unveiled a more stringent cost-saving plan after a board meeting, considering potential plant closures and workforce reductions. Oliver Blume, Konzernchef, attributed the tough market situation in Europe and the declining competitiveness of German production sites as main factors.
Habeck acknowledged that the transformation challenges within the automotive sector are currently "huge." German automakers need to keep up with global competition. "Long-term planning certainty, such as that offered by the EU's commitment to CO2-neutral vehicle production by 2035, is also essential for maintaining our location advantage."
Habeck criticized those, like Friedrich Merz (CDU) and Markus Söder (CSU), advocating for a reversal. He believed they were undermining reliability and not fully grasping the necessity for long-term viability. He warned that vacillating policies were already causing significant investment uncertainty in the value chain, and only China would benefit, continuing to enhance its technological development.
The German government has consistently backed e-mobility. "We will continue our support for this transformation through measures on both the demand and supply sides," Habeck pledged.
New electric vehicle registrations in Germany have been on a downturn for months. In July, around 30,100 electric cars were registered, representing a third less compared to the previous year. Electric vehicles represented a market share of approximately 13 percent.
One reason is the expiration of public funding for electric vehicle purchases last year. Other factors include high prices. The increasing political calls for abandoning the EU's commitment to replacing traditional engines by 2035 are also contributing to consumer uncertainty.
In response to Habeck's call for long-term planning certainty, a concerned worker might ask, "- What about the impact on our jobs and our industry if we abruptly shift towards CO2-neutral vehicle production?" Further down the line, after analyzing market trends, a Volkswagen executive could say, "- What strategies should we consider to compete effectively in the electric vehicle market?"
