Germany cuts electric vehicle incentives as sales fall

Incentives for buying electric and hybrid vehicles have long been a key influence on their sales performance.

Such schemes can distort the market and conceal the genuine level of demand for these vehicles. That became evident in September’s figures for Germany, Europe’s largest car market.

Germany’s September electric vehicle sales

Compared with September 2022, the German market contracted by a very slight 0.1% in September, reaching 224,502 units. This decline was driven primarily by a 28.6% fall in electric car sales, to 31,714 units, and a 45.7% drop in plug-in hybrid sales, to 15,383 units.

This followed the withdrawal, from 1 September, of German purchase incentives for electric cars bought by companies and fleets. These incentives could be worth up to €4,500, while support for private buyers remained in place.

In August, the final month in which the incentives were available, there had been a “rush” to buy electric vehicles, with sales soaring by 170% compared with August 2022.

Incentives for private buyers will be reduced

The coming months should provide a clearer picture of the real effect of ending these incentives, but another threat is now emerging: reduced support for private buyers.

From January 2024, the incentive for private individuals purchasing electric vehicles will fall from €4,500 to €3,000. Eligibility will also be restricted, as vehicles will need to be priced at no more than €45,000, compared with the current €65,000 limit.

A further “rush” for electric vehicles is highly likely, especially in November and December, as buyers seek to benefit from the more generous incentives. This is likely to be followed by lower sales in the first months of 2024.

Electric vehicle incentives are being scaled back

Cuts to, and even the removal of, incentives for buying electric vehicles are becoming an increasingly clear trend across Europe. The success of these schemes has been undeniable, resulting in substantial year-on-year increases in electric vehicle sales. Between January and September 2023, electric vehicles accounted for 14% of the overall market (Source: ACEA).

It remains to be seen how the withdrawal of incentives will affect the pace of electric vehicle adoption across Europe.

Source: Automotive News Europe