In order to plug the holes in the budget, the funding for electric cars will expire earlier than planned – perhaps as early as the end of the year. The federal government is miles away from its goal of transforming transport.
A new electric car in Germany costs an average of 52,700 euros, as a recent calculation by the Center of Automotive Management (CAM) showed. For many consumers, this is clearly too much. Because the high prices are slowing down the switch to sustainable drives, the state is offering a subsidy for purchases. But this environmental bonus will soon be lost – even sooner than expected.
Funding may stop at the end of the year
As part of the fundamental agreement on the federal budget, Economics Minister Robert Habeck announced that funding from the Climate and Transformation Fund (KTF) would be ended sooner than previously planned. When exactly, however, is still unclear. “The environmental bonus will expire soon,” said the Federal Ministry of Economics (BMWK). tagesschau.de with. No further details were given. Applications that have already been received should still be processed.
The environmental bonus has been available since 2016 and is now only available to private individuals. It consists of a manufacturer’s share, which is offset directly against the purchase price, and a contribution from the state. Buyers must apply for the federal share at the Federal Office of Economics and Export Control (BAFA). This year there was a total of 2,250 to 6,750 euros in funding for the purchase and leasing of purely electric cars – depending on the purchase price and condition of the vehicle.
Originally, new funding rates were supposed to apply from next year: 1,800 to a maximum of 4,500 euros – and nothing at all for electric cars with a net list price of more than 45,000 euros. The environmental bonus should then expire completely at the end of 2024. According to media reports, it could now be the case that no new applications can be submitted even at the turn of the year. What consequences does this have for the transport transition in Germany?
“Will put a damper on ramp-up”
“The announced early end to the environmental bonus – now also for private customers – will put a further damper on the ramp-up of electromobility,” says Helena Wisbert from the Center of Automotive Research (CAR). tagesschau.de. Although the timing has not yet been determined, customers are already reacting with purchasing reluctance. “The environmental bonus can only be applied for when the electric car is registered, and this usually only takes place several months after the order was placed,” explains the expert.
It is extremely questionable whether there will still be funding. In order to ensure that those who had already ordered their electric car with confidence in the funding receive the bonus, the Association of the Automotive Industry and the ADAC are demanding that the purchase date – and not the delivery date – be the decisive criterion for receiving the environmental bonus becomes.
Environmental bonus crucial for the increased Admission numbers
In recent years, according to experts, it was primarily the subsidy from the state that ensured that the growth rates in new registrations rose continuously. “In recent years, the incentive has played a major role – especially given the fact that electric vehicles are simply more expensive than combustion engines,” says ADAC spokeswoman Katrin van Randenborgh.
Especially at the end of 2022, there was a real run to get the highest funding rate of 10,000 euros. “This year, given the changed funding background, we have seen significantly less: hybrids and company cars have been eliminated,” says van Randenborgh. According to the Federal Motor Transport Authority (KBA), almost 470,000 purely electric cars were newly registered between January and the end of November – the share of total registrations was 18 percent.
Only three electric cars under 30,000 euros on the German market
There are now more than 1.3 million electric cars on the road in Germany. Nevertheless, the federal government is a long way from the goal it has set for itself: 15 million electric cars should be on German roads by 2030, the traffic light parties had set out in their coalition agreement. But the trend points in the other direction: new registrations in November were around 22 percent lower than in the previous year due to the weak economy and high interest rates.
“The 15 million target is difficult to achieve without further measures,” says Wisbert. Even including the environmental bonus, the electric car is one of the more expensive vehicles and is having a difficult time due to the current market conditions. “If the environmental bonus is stopped prematurely, the goal will become even more distant,” emphasizes the professor of automotive economics at the Ostfalia State University of Applied Sciences in Wolfsburg.
Industry expert Ferdinand Dudenhöffer expects up to 200,000 fewer sales in Germany in 2024 if applications for the bonus are no longer accepted at the beginning of the year. “Combined with the uncertainties in electric mobility in terms of range, charging options and battery life, it would be extremely important that the funding continued at least until 2024,” says van Randenborgh. Especially when it comes to small cars, the range is still relatively small – and therefore expensive. “We currently have three electric cars available on the German market for less than 30,000 euros.”
Federal Government finds environmental bonus “dispensable”
The expansion of electromobility is actually considered an important contribution to the federal government’s strategy for achieving climate goals – the transport sector is a problem child. So does the traffic light risk its own intentions? “The decision does not change the federal government’s goals,” writes the BMWK. “The environmental bonus would have expired next year anyway.” There is currently a lot of movement on the market for electric cars; German car manufacturers have announced numerous other new models, including in the lower price segment.
“Electromobility is therefore becoming suitable for the mass market, and support is increasingly unnecessary – even beyond budgetary issues,” it continues. A cut in the environmental bonus would enable resources to be concentrated on those areas where support is still urgently needed. “However, the BMWK would have liked to avoid an early end to the environmental bonus.”
But will e-mobility actually be suitable for the masses soon? “It depends on what kind of vehicle offering the manufacturer will offer in 2024,” says van Randenborgh. The fact that there are smaller and cheaper electric vehicles is a fundamental factor. “We expect a supply-induced market stimulus from 2026, because cheaper vehicles will then also come onto the market,” expects CAR expert Wisbert. But there are also points to make electric cars more attractive for everyone – for example, expanding the public charging infrastructure and shortening the charging time.