E-car subsidy falls: Subsidy cuts ensure small car "year-end rally"

In the new year, the state will cut its subsidies for the purchase of electric cars.

E-car subsidy falls: Subsidy cuts ensure small car "year-end rally"

In the new year, the state will cut its subsidies for the purchase of electric cars. For many customers, there is obviously a reason to hit the car dealerships this year. A small ray of hope for the industry at the end of a disappointing year. The pre-crisis level remains a long way off.

The forthcoming cut in government subsidies for e-cars gave car sales a boost in November. According to the Federal Motor Transport Authority, 260,512 new cars were registered last month, almost a third more than in the same month last year. For the first time, more than 100,000 cars with electric drive went to their first owners, according to the Association of the Automotive Industry (VDA) at the "year-end rally" on the German car market. "Many customers and dealers want to register as many new electric vehicles as possible before the environmental bonus funding is significantly reduced at the beginning of 2023," said the Association of International Motor Vehicle Manufacturers (VDIK).

According to the VDIK, 102,600 purely electric cars and plug-in hybrids were 50 percent more new cars on the road than in November last year. Almost four out of ten new cars had a battery drive. Plug-in hybrids were therefore particularly in demand because their support will be completely eliminated in January.

From January, the state will only subsidize purely electric vehicles with a net list price of up to 40,000 euros with 4,500 euros instead of 6,000 euros. With a net list price between 40,000 and 65,000 euros, the subsidy drops to 3,000 from 5,000 euros.

Commercial new registrations increased more strongly in November than those of private car buyers. Electric cars sold better than cars with internal combustion engines, so their market share in November was 22.3 percent at almost 58,000 vehicles. Gasoline and diesel cars each achieved a market share of almost 28 percent.

"The current market growth shows that the availability of semiconductors and other preliminary products, which had led to massive production losses in the previous year, is improving," explained the car expert at the consulting firm EY, Peter Fuss. A significant increase in sales is to be expected again in December. "Automakers are working off their order books, which were still well filled recently," he continued. The bottom line, however, remains a sales level that is still below the already low level of the previous year.

With the currently very high sales of electric cars, “the phasing out of subsidies for plug-in hybrids and the reduction in subsidies for purely electric cars should play a major role,” explained Fuß. From January, "a slump in plug-in sales and a damper on electric cars can be expected".

"At the end of a generally disappointing automotive year, there is hope for a small final sprint," explained VDIK President Reinhard Zirpel. There are also indications of good registration figures for December. Nevertheless, with a total of 2.6 million new cars, the market remains at a low point. From January to November, the office issued 2.33 million new registrations. Thanks to the strong increase in November, the minus in the year to date has reduced to 2.4 percent compared to the previous year after 5.5 in October.

The VDA also stated that the pre-crisis level was a long way off. By the end of November, around 30 percent fewer cars had been newly registered than in the same period in the pre-crisis year of 2019. The lack of primary and intermediate products and the high energy and raw material prices continued to dampen the market and production. Orders received by German manufacturers from Germany fell by 37 percent in November, and those from abroad by just over two percent.

Among the German brands, Audi achieved the clearest growth in November with a doubling (plus 109 percent). Volkswagen (plus 58 percent) and Ford (plus 54 percent) achieved increases in registrations of more than half. At Mercedes, the increase was 34 percent. Porsche (plus 15 percent) and BMW (plus 13 percent) each achieved double-digit growth. At Smart, new registrations fell by 46 percent, Mini posted a 7 percent decline and Opel a minus of 2 percent. Among import brands, Tesla achieved 93 percent growth in November. Volkswagen again accounted for the largest share of new registrations at 18.0 percent.