Electric car: Germany ends purchase subsidy without notice, manufacturers fear

From Monday, Germans are no longer entitled to bonuses when buying an electric car. They are bearing the brunt of the budget crisis following the financial earthquake triggered by Germany’s constitutional court in November.

The body then estimated that the government had violated constitutional budget rules by reallocating 60 billion euros of spending planned in connection with the pandemic to fight global warming. The decision created a huge budget hole and threw Chancellor Olaf Scholz’s ruling coalition into disarray.

Not enough money available »

A spokesperson for the Department of Economic Affairs acknowledged that this deletion created “ unfortunate situation » for consumers. But this decision was necessary” because there is no longer enough money available to consider applications received after Sunday “, the spokeswoman confirmed.

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The competitiveness of car manufacturers will now be seriously damaged » Estimates Ferdinand Dudenhoeffer from the Automotive Research Center, for whom this decision could have dramatic consequences. Business newspaper Handelsblatt warned that scrapping the bonus could jeopardize Germany’s goal of putting 15 million electric cars on the road by 2030. This goal was already considered extremely unrealistic, now it seems completely illusory », the newspaper estimated.

A new blow for German manufacturers

According to the Ministry of Economy, since 2016 a total of 10 billion euros has been earmarked for around 2.1 million electric vehicles. The flagships of the German automotive industry face the transition to eco-mobility with difficulties. This in the context of weak demand associated with a moribund global economy.

German manufacturers also face competition from their Chinese rivals, despite China being one of their main markets. ” The Chinese are massively expanding their car industry because they have consumers. Our manufacturers no longer have them » underlined Ferdinand Dudenhoeffer.

Individual announcement expected in November

The German car market thus began to decline again in November, penalized by electric models. A total of 245,701 cars were registered in Germany last month, a decrease of 5.7% compared to November 2022, the Federal Automobile Agency (KBA) said.

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Of that total, sales of electric cars, nearly 45,000 units, fell by 22% in one year, the agency said. The main reason was the uncertainty as to whether the support – already reduced – for the purchase of an electric model for natural persons would continue or not. ” It is regrettable that the federal government has decided to significantly reduce the environmental bonus », lamented Reinhard Zirpel, president of VDIK German Federation of International Automobile Manufacturers.

While the price of electric cars remains 10 to 12% higher than an equivalent traditional model, he called on manufacturers to offer entry-level electric models. in all segments “, and not just small vehicles,” with the goal of democratizing the overall purchasing decision process “.

Cuts in public spending to fill the budget hole

The decision to scrap support for electric vehicle purchases reflects Germany’s difficulty making ends meet. Last Wednesday, the German chancellor and his coalition reached a last-minute deal to solve the conundrum through spending cuts.

The announced compromise should allow Europe’s largest economy to once again respect its rule of strict reduction of the public finance deficit next year. The government’s majority opted for cuts in public spending to fill a 17 billion euro budget hole in 2024. We have to make do with a lot less money “, emphasized Chancellor Olaf Scholz when presenting the agreement, explaining that it was necessary” set priorities “.

The fallout: Germany’s central bank sharply cut its growth forecast for 2024. The Bundesbank now expects GDP in Germany to grow by 0.4% next year, compared with 1.2% in its last forecast in June. For 2023, it projects a recession limited to 0.1%, compared to the previously estimated 0.3%.