Subsidy cuts jeopardize transformation

    Berlin, July 26, 2022

    Decision causes maximum uncertainty among consumers - Restriction to private purchases slows down the switch to e-mobility – State causes fail in more flexibility and consumer proximity

    The federal government has agreed to massively cut subsidies for e-cars, abolish them for hybrid models and limit them to private car buyers from September 1st, 2023.

    "This agreement is more than disappointing for consumers. In times of rising costs and burdens, the decision to unilaterally and comprehensively cut funding is incomprehensible. Consumers are left behind and the ramp-up of e-mobility is  slowed down," explains VDA President Hildegard Müller.

    Last year, 63 percent of those interviewed in an Allensbach survey stated that the cost of purchasing an electric car was too high. The premium was an important tool to counteract this and make it easier for more people to switch to e-mobility. "Investments in climate policy always pay off in the long term, making cuts here is counterproductive and unsustainable," says Müller.

    It is right to reduce funding in the long term, but now is the wrong time: "The electric car is gradually becoming a mass product due to the increasing conversion of plants. There will then be further technological leaps and economies of scale, so that the costs for an electric car will certainly continue to fall – they can then even be lower than for a combustion engine – which means that the support measures can then of course also be omitted," emphasizes Müller.

    For the moment, however, the following applies: "Especially with regard to the planned tightening of EU fleet limits, a more powerful signal on the market would have been needed. This decision slows down the transformation to e-mobility. The opportunity to continue a previously successful model was deliberately lost," explains Müller.

    "It is just as incomprehensible that the premium will only be paid out to private car buyers from September 1st, 2023. The fact is: A switch to e-mobility is needed in all fleets. It is precisely the company cars and other commercial cars that enter the used car market at lower prices and thus ensure a more climate-friendly fleet overall. The new regulation is a heavy burden for medium-sized businesses and logistics companies. Excluding craftsman’s vehicles, for example, is also a wrong decision regarding the growing demand in this area in particular," says Müller.

    Statistics prove the success and necessity of the bonus

    The statistics confirm the success of the bonus to date: in the first six months of this year there were a good 271,000 applications for the environmental bonus. The commercial share of the applications was more than 50%. Here in particular, funding plays an important role and contributes to the electrification of the car fleet.

    The figures also show that plug-in hybrids play a significant role in the ramp-up of electromobility: in June of this year, e-cars accounted for more than 26% of all new registrations. PHEV accounted for 45% of new e-car registrations.

    Müller emphasizes: "For many people, the plug-in hybrid is the ideal way to get started with e-mobility, especially in regions where the charging infrastructure is still insufficient. With the abolition of the premium for plug-in hybrids, politicians are letting people down who have to travel longer distances. Consumers are paying the price for the expansion of the charging infrastructure which falls short of expectations. As a reminder: the current rate of expansion of charging stations needs to be increased sixfold in order to achieve the goal of the coalition agreement of one million charging points by 2030."

    Capping and payout timing make receiving rewards a gamble

    In addition to a cap on the funding volume, the new funding rules also provide for the lowering of the funding threshold in the coming year. In addition, the payment of the premiums should continue to be linked to the date of registration of the vehicle, not to the date of the order.

    "Due to the COVID19 pandemic and the war in Ukraine, supply chains and the procurement of necessary raw materials continue to be massively disrupted, so that delays in the delivery of e-cars cannot be ruled out for the time being. The consumer should not be penalized for this.

    Due to the additional cap on the funding and the unclear award date, interested parties no longer know whether they will ultimately actually receive the funding. Purchasing an e-car threatens to become a gamble for consumers. Instead of motivating people to switch to e-mobility, the new funding regulations are unsettling and even deter them from making a purchase. With such a high investment, people need maximum planning security and not arbitrariness. This is how the path to climate-neutral mobility is being politically slowed down," emphasizes Müller.

    The car manufacturers have repeatedly signaled their willingness to link the payment date to the purchase date: "This important protection of legitimate expectation fails because of the state," says Müller.

    Press Office

    Simon Schütz

    Head & Spokesperson with focus on politics and society