While Germany was expected to gradually phase out incentives for electromobility earlier than planned, it now appears that they will be completely eliminated in 2024.
“We will gradually eliminate the environmental bonus, that is, the subsidy for electric vehicles, earlier,” said German Economy Minister Robert Habeck at a press conference alongside Federal Chancellor Olaf Scholz and Finance Minister Christian Lindner.
“It hurts, but that’s the price we must pay to maintain the central components, the pillars of the Climate and Transformation Fund,” clarified Habeck.
Initially, the environmental bonus was supposed to continue until the end of next year.
However, according to the German newspaper Handelsblatt, starting from January 2024, zero-emission vehicle drivers may no longer be eligible to apply for grants in Germany.
Notably, according to modified funding guidelines for the environmental bonus, government participation would have decreased next year.
Additionally, only Battery Electric Vehicles (BEVs) and Fuel Cell Electric Vehicles (FCEVs) with a net list price of up to 45,000 euros would have been eligible, excluding numerous models that cost more.
The subsidy amount for units under 40,000 euros would also have been reduced.
While it seems that German EV buyers can still apply for subsidies this year, to be eligible, they should have already received their cars.
Some manufacturers offered to cover their share of the bonus if the vehicle is ordered before the end of 2023. Otherwise, buyers will not receive any incentives.
It is worth mentioning that the announcement of the gradual elimination of incentives comes after the German Federal Constitutional Court declared illegal, in mid-November, the allocation of funds (initially reserved to combat the Covid pandemic) for climate protection projects.
Therefore, the German government had to cut spending, and the Climate and Transformation Fund (KTF) is at the center of these cuts.
According to the government, the KTF will remain “the central instrument for a climate-friendly transformation.”
Nevertheless, the budget will be significantly reduced: 12 billion euros in 2024 and a total of 45 billion euros by 2027.
The total volume of the fund will then amount to around 160 billion euros.
However, diesel taxation compared to petrol, known as the “diesel privilege,” will not be affected. Company car tax and traveler subsidies will also remain unaffected.
These are the aspects that are being criticized.
“This compromise amounts to a standstill rather than the progress promised by the government. The FDP-driven savings budget cuts support for the solar industry and allows subsidies for EVs to expire sooner,” says Bastian Neuwirth, an economic expert from Greenpeace.
“But the harmful company car privilege will not be abolished, and diesel fuel will be subsidized by billions more; this is hindering ecological modernization,” he adds.
Automakers, if they haven’t already, could still issue environmental bonus guarantees or grant discounts in 2024, at least for the manufacturer’s share, to provide their customers with some planning security.
Nevertheless, this is not necessarily something that can be expected from premium manufacturers.
Due to the anticipated reduction in the upper net price limit to 45,000 euros, many models would have been excluded from the subsidy system anyway.
Until now, vehicles with a net base price of up to 60,000 euros could apply for subsidies.
All of this is likely to be just a temporary setback in 2024.
After all, with the EU fleet emissions and fuel consumption guidelines coming into force in 2025, more EVs will need to hit the roads.