Germany plans to reduce purchases of electric vehicles next year after a deal in the governing coalition. The growing popularity of electric vehicles makes government subsidies unnecessary, Germany’s economy ministry said on Tuesday.
Incentives to purchase electric vehicles will expire in full once an allocation of 3.4 billion euros from the budget for the next two years is spent, according to government sources.
“E-vehicles are becoming more and more popular and will no longer need government subsidies in the foreseeable future,” said Economy Minister Robert Habeck.
The incentive for electric-powered vehicles priced below 40,000 euros will drop to 4,500 euros at the beginning of next year and fall to 3,000 euros the following year. Previously for the purchase of electric vehicles priced under 40,000 euros there would be an incentive of 6,000 euros currently.
For cars priced above 40,000 euros, the incentive provided by the government will drop to 3,000 euros at the beginning of next year from the current 5,000 euros.
Electric vehicles priced above 65,000 euros will not be subsidized. The regulation also applies to vehicles priced at 45,000 euros or more from 2024.
Electric vehicle sales nearly doubled to 328,000 in 2021 compared to the previous year. There are currently more than 600,000 electric-powered vehicles on German roads. If you add hybrid vehicles, there are over a million vehicles in Germany.
The share of pure electric cars in new car registrations in Germany is around 14%. Volkswagen has the largest market share for electric cars in Germany at 20.3%, followed by Tesla with 11.2%.
The plan to reduce subsidies for the purchase of electric vehicles has been criticized by the VDA Automotive Association.
“In times of rising costs and burdens, the decision to unilaterally and comprehensively cut funding is incomprehensible,” said VDA President Hildegard Mueller.
