The federal government wants to cut back on subsidies for electric cars

BERLIN From next year, buyers of purely electric cars will receive less support from the state – the pool of subsidies is to be limited. Subsidies for plug-in hybrid vehicles are expected to expire later this year. The federal government has agreed to a fundamental funding reform, the Economy Ministry announced on Tuesday.

Minister of Economy and Climate Protection Robert Habeck (Greens) said that electric mobility has moved to the mass market. For the foreseeable future, electric vehicles will no longer need government subsidies. The transition to this point is currently designed with a new financing concept. Funding should concentrate on purely electric vehicles. “This provides greater climate protection in transport and uses the available budget intentionally.”

Finance Minister Christian Lindner (FDP) previously proposed to abolish the purchase premium (“environmental premium”) for pure electric cars

– to save money. The Finance Minister urges the federal government

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will re-apply to the debt brake suspended during the 2023 krone pandemic. In a coalition agreement, the SPD, the FDP and the Greens agreed to reform the promotion of electric cars from 2023.

A funding limit is planned. According to government circles, a total of EUR 3.4 billion has been allocated to the promotion of purely electric cars – EUR 2.1 billion for 2023 and EUR 1.3 billion for 2024.

The funds for the environmental bonus will be made available in the federal climate and transformation fund, whose economic plan is to be approved by the government on Wednesday. “When the funds run out, the funding ends with an environmental bonus,” says the ministry.

The question is whether there is enough money – will the candidates get nothing when the pot is empty. It was pointed out in coalition circles that from 2023 plug-in hybrid vehicles will no longer be financed – so these funds will be saved. According to the competent Federal Office for Economics and Export Control, as of July 1, 2022, a total of over 1.3 million applications for the environmental bonus were submitted – around 741,000 for pure electric vehicles and around 576,000 for plug-in hybrids 2022 will amount to EUR 5 billion .

Plug-in hybrids combine an electric motor and an internal combustion engine. They are repeatedly criticized by environmental organizations, as these vehicles are mainly offered in the SUV segment and are mostly not electrically powered.

Several pure-electric car reform steps are currently planned. According to the ministry, as a first step, federal funding for cars costing less than € 40,000 will be cut from the current € 6,000 to € 4,500 from the beginning of 2023. For cars with a net list price of € 40,000 to € 65,000, it should be € 3,000 instead of the previous € 5,000. For plug-in hybrid vehicles for which there is currently a bonus of up to € 4,500, the subsidy expires at the end of 2022.

From September 1, 2023, funding will be limited to private individuals – companies will then get nothing. According to the ministry, funding for small businesses and non-profit organizations is still under investigation.

From 1 January 2024, the premiums for the purchase are expected to drop further to 3,000 euros – but only for cars with a maximum cost of 45,000 euros. Thus, more expensive vehicles no longer receive state subsidies.

In addition to state contributions, there is also the so-called producer share, which could also decrease. Important for e-car buyers: The grant application should still require vehicle registration.

Habeck suggested in the spring that the subsidy for plug-in hybrid cars should be canceled earlier than planned at the end of 2022. According to Habeck’s plans, in the future there should be less money than the state for purely electric cars.

According to the agreement, the tax benefits of electric cars and plug-in hybrids in the regulations on company cars are to be maintained, and especially the Greens are in favor of the changes.

The chairwoman of the FDP parliamentary group, Carina Konrad, said: “The premium for buying an electric car is now being gradually reduced to a reasonable level and is being phased out.” Few budgetary resources should be used in a targeted manner.

Hildegard Müller, president of the Automotive Industry Association, warned against further linking bonus payments to the registration date. “Due to the additional subsidy limit and the unclear grant date, the bonus could become a gamble for consumers,” she said. Manufacturers are ready to link the payment to the date of purchase.

Many electric cars require long waiting times. ADAC Transport President Gerhard Hillebrand said it is unacceptable that consumers who have already ordered a battery powered car now receive significantly less funding due to delivery difficulties. There has to be an inventory.

In mid-2020, the existing purchase premium (“environmental premium”) was increased by the “innovation premium”. The federal government doubled its subsidy, while the producer price cuts remained unchanged. This led to the release of multi-billion dollar funding. New registrations of pure electric cars and plug-in hybrids have increased significantly.

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