Germany’s national government officially decided to end the current electric car subsidy program after it spent €10 billion since 2016, Reuters reports, citing the Economics Ministry’s announcement on December 16.
Announcement
Federal Ministry for Economic Affairs and Climate Action (BMWK) disclosed in the press release that it would not accept any more applications for the battery-electric vehicle subsidy of up to €4,500.
However, it assured previously accepted applicants that it would still fulfill the promised subsidies. Meanwhile, existing submissions “will be processed in the order in which they are received and – provided the eligibility requirements are met – approved.”
As per BMWK, the program has already subsidized a total of 2.1 million electric vehicles equivalent to about €10 billion since its launch in 2016.
“The funding programme has been very successful and has decisively advanced electric mobility in Germany.”
BMWK
Deciding factor
The Driven reported that Germany’s decision occurred after the budget crisis in November this year, which involved the constitutional court’s ruling that the proposal to transfer €60 billion to climate and transformation projects-related special fund was unlawful.
“As part of the negotiations on the Climate and Transformation Fund (KTF), it was decided on December 13, 2023, to end support through the environmental bonus as soon as possible. As of December 17, 2023, no new applications for the environmental bonus can be submitted to the Federal Office of Economics and Export Control (BAFA). The background is the implementation of the Federal Constitutional Court’s ruling, as a result of which 60 billion euros will be withdrawn from the KTF. Therefore, the KTF’s economic plan for 2024 has to be redrafted, and fewer resources are available to it.”
BMWK
In effect, the national government announced plans to reduce the budget for such projects by billions of euros. Economy and Climate Minister Robert Habeck reportedly indicated that the spending reduction involved an earlier-than-expected withdrawal of the country’s support for electric vehicle adoption without providing specific details.
“As the buyer advances the premium and can claim it back [once] the vehicle has been registered, several thousand people are now likely to be quite angry or at least disappointed. Once again, the government is showing people that they cannot be relied upon.”
Christina Kunkel in an op-ed for Süddeutsche Zeitung
Tesla to bear the full subsidy
Before the sudden termination of the EV subsidies, buyers can access a €6,750 discount on eligible models. The automaker provides €2,250 of the total discount, while the government bears the remaining.
After Germany’s announcement, Tesla offered some good news to its current and potential customers. According to the American electric automaker’s X post, it will compensate for the now-terminated EV subsidies to aid the country’s smooth electrification. It includes new orders for Tesla Model 3 and Y units starting December 18. Customers must receive delivery by December 31. Tesla will now provide the entire €6,750 EV subsidy for customers of the said models.
Tesla also stated plans to still provide the manufacturer’s share of €2250, as noted by Teslarati.
Industry expert Ferdinand Dudenhöffer told Focus Online that the changes can result in an astounding 200,000-unit drop in new EV registrations in 2024.
“The electric car is coming to a standstill.”
Industry expert Ferdinand Dudenhöffer told Focus Online
Germany set a target of registering at least 15 million EVs by the end of the decade. However, its move to end the subsidies can significantly impede the country’s progress towards the said goal.
