Traffic lights pull the plug: no further funding for e-cars

Budget deficit - Traffic lights pull the plug: no further funding for e-cars

Car buyers must prepare themselves for a rapid end to state subsidies for electric cars. A spokeswoman for the Federal Ministry of Economics said that the subsidy is to expire "soon". Economics Minister Robert Habeck announced that the subsidy would end earlier than previously planned.

It is unclear exactly when the funding will end. It could be that no new applications can be submitted by the end of the year. However, applications that have already been received will still be processed.

Full brake on funding due to budget woes

After lengthy negotiations, the leaders of the traffic light coalition of SPD, Greens and FDP reached an agreement in principle on Wednesday on how to plug the billions of euros in gaps following a budget ruling by the Federal Constitutional Court. This concerns the core budget as well as the Climate and Transformation Fund (KTF) - from which the funding for e-cars is also financed.

According to the ministry, the previous plan was for the e-car subsidy to expire at the end of 2024 - or earlier if the funds are used up. However, some of the funding programs financed by the KTF have now come to an end. "Unfortunately, this includes the fact that the environmental bonus will expire earlier than planned," said Ministry of Economic Affairs circles.

Subsidy stop could stall sales of e-cars

The consequence: sales of e-cars could collapse. "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 if applications for the bonus are no longer accepted from January 1, 2024.

According to figures from the Federal Motor Transport Authority, around 470,000 pure e-cars were newly registered from January to the end of November - accounting for 18% of total registrations.

According to Dudenhöffer, the range of e-cars has been significantly expanded. "However, they are clearly too expensive for new car buyers without the subsidy." The lower premium and the end of commercial subsidies had already halted the ramp-up of e-mobility.

In 2016, the then German government decided to introduce a purchase premium to boost sales of electric cars - which was successful. At the beginning of this year, the premium for purely electric cars was cut. Plug-in hybrids, which use a combustion engine in addition to an electric motor, have no longer received any state support since the beginning of the year. And since September, only private individuals have been able to apply for state subsidies - they are no longer available for commercially used cars.

The federal government's target is even more shaky

At the end of November, the industry came together for a "car summit" with Federal Chancellor Olaf Scholz (SPD). According to the government, there was agreement that the purchase costs of e-cars must be reduced in order to drive forward the expansion of e-mobility. Even before the meeting, many in the industry warned that the German government's target of 15 million e-vehicles on the roads by 2030 was unlikely to be met. At the beginning of November, the number of purely electric cars was around 1.3 million, according to industry figures.

Following the earlier expiry of the purchase premium, the German government's target of 15 million e-cars by 2030 is now a very long way off, said Reinhard Zirpel, President of the Association of International Motor Vehicle Manufacturers: "We must now expect new registrations of e-vehicles to fall next year, with the result that CO2 emissions from transport in Germany will rise."

However, the expansion of electromobility is actually seen as an important contribution to the German government's strategy to achieve climate targets - the transport sector is a problem child.

The President of the German Association of the Automotive Industry, Hildegard Müller, criticized: "Letting the environmental bonus expire earlier is - in times of overlapping crises and rising costs for the people in our country - a wrong decision." In order to ensure that at least those who had already ordered their electric vehicle in reliance on the subsidy receive the bonus, the government must immediately make the date of purchase - and not the date of delivery - the decisive criterion for receiving the environmental bonus.

The ADAC expects the abolition of the bonus to put a considerable damper on small and mid-range vehicles in particular. At the very least, applications that have already been submitted should still be approved in the interests of planning security. Ulrich Lange, deputy leader of the CDU/CSU parliamentary group, said: "The immediate abolition of the environmental bonus will slow down electromobility, as many people will no longer be able to afford an electric car."