After many months of waiting, the Federal Government has finally introduced new tax incentives aimed at the acquisition of electric vehicles (EVs) by companies.
These incentives, which allow for accelerated depreciation of EV acquisition costs in the first year, seek to revitalise a market that has shown signs of stagnation following the elimination of the environmental bonus in December 2023.
These measures could be seen as an effort to stimulate eMobility and meet climate targets.
However, it is important to note that they arrive at a time when one of the country’s automotive giants, Volkswagen, is facing a crisis that could have profound implications for the national economy.
The new tax incentives allow companies to deduct up to 40% of the cost of an EV in the first year of acquisition.
In the words of the Minister of Economy, Robert Habeck, this measure is essential to “ensure that Germany remains an important car manufacturer and an internationally competitive country.”
For many industry leaders, these subsidies appear to be a direct response to the pressure facing VW, which has warned of potential plant closures and mass layoffs due to low demand for its electric vehicles.
Thomas Schäfer, a member of the Management Board of Volkswagen AG, has been clear in his explanation:
“In the first half of the year, fixed costs have increased and have not been offset by car sales and revenue.”
This has led the company to consider drastic measures, a situation that has never before occurred in its history in its home country.
The crisis at VW is not an isolated phenomenon.
The decline in EV sales in Germany, which has been exacerbated since the expiration of government subsidies for private buyers, could reflect a market that has not yet matured enough to sustain itself without external support.
Nevertheless, it should be noted that many experts have repeatedly told Mobility Portal Europe that it has.
Recent figures show a 69% drop in EV registrations in August 2024 compared to the same month last year.
This decline is alarming for a country that has made the transition to electric mobility one of its pillars in combating climate change.
The introduction of the new tax incentives could therefore be interpreted as an attempt by the Government to prevent a collapse in the German automotive industry, which is a fundamental cornerstone of its economy.
In addition to direct subsidies, tax advantages for employees who use company EVs have been expanded, raising the maximum gross list price limit from 70,000 to 95,000 euros.
This not only facilitates the acquisition of high-end EVs: it also represents an effort to maintain the attractiveness of these cars in a market that is witnessing increasing competition, particularly from Asia.
Volkswagen’s situation is particularly emblematic of the challenges facing the German automotive industry as a whole.
The firm’s leadership, headed by Oliver Blume, has defended the need for drastic adjustments so that the company can compete in an increasingly globalised market dominated by emerging players.
In this regard, Blume has stated: “The European automotive industry is in a very difficult situation, and this applies particularly to the VW brand.”
Although the Government of Olaf Scholz has chosen not to interfere directly in the negotiations between the company and the unions, it has shown its willingness to intervene should the situation worsen.
This underscores the importance of VW not only as a car manufacturer but also as a driver of prosperity and innovation in Germany.
Volkswagen and its struggles in the EV sector
It is important to note that this situation is compounded by the possible closure of its first European plant in Brussels, Belgium.
“The Audi Q8 e-tron model family, which is currently produced at Audi’s Brussels plant, has been affected by a significant drop in demand for this specific segment,” the firm details to Mobility Portal Europe.
And it reveals: “As a result, Audi is considering an early cessation of production of the Q8 e-tron series.”
It has informed its board of its intention to restructure, which could include measures such as the complete closure of the plant.
“An early cessation of production could impact employment and necessitate the search for alternative solutions for the plant,” notes the brand’s spokesperson.
The costs associated with the potential closure of the Brussels plant and other unforeseen expenses could have a total impact of up to 2.6 billion euros in the 2024 financial year.
The information and consultation process began on 18 July, and no decisions have yet been made.
However, the firm assures that it will maintain a fair and constructive dialogue throughout this phase, fully recognising its responsibility towards its employees.
What will happen to the production of this model if the plant closes?
“We currently plan to manufacture the successor to the Q8 e-tron at Audi’s plant in San José Chiapa, Mexico,” they confirm to Mobility Portal Europe.
Moreover, in Germany, Volkswagen had to reduce the number of employees at its plants in Emden, Dresden, and Zwickau due to the decline in electric vehicle sales.
