Sales of new plug-in (EV or PHEV) vehicles in Germany in September 2023 took a massive hit as the country’s EV subsidies continued time-gated phaseouts, based on data analyzed by InsideEVs. Specifically, business subsidies for EV purchases were eliminated entirely as of September 1, 2023 — and the result was a 35% reduction in all plug-in registrations year over year for the month of September. BEV registrations, as compared to the total figure (i.e., including PHEVs), dropped 29% in the same period. As of this time, total plug-in sales in Germany are still up 5% in 2023 compared to 2022, but that puts the market perilously close to backsliding.
Right now, private buyers in Germany are still eligible for the plug-in subsidy, but that will undergo a further reduction in January 2024 (it was already reduced at the beginning of 2023). Currently, BEVs in Germany under €40,000 are eligible for a €4,500 subsidy, while BEVs costing between €40,000-60,000 get a €3,000 subsidy (cars over €60,000 receive no subsidy at all). Starting in January 2024, the BEV subsidy goes to €3,000 for all vehicles under €45,000 — with no subsidy at all for BEVs over that cost.
German customers are well aware of these changes and have planned their buying accordingly, with an apparent surge in sales in August ahead of the sunsetting business subsidy. Customers are similarly aware that these subsidies make exporting their cars (after a six-month “lockup” period to retain your subsidy) a good way to maximize the resale value of your EV. Analysis from Dataforce in 2022 indicated that upwards of 40% of all plug-in vehicles registered in Germany from 2018 were no longer in the country at the end of 2021 (compared to 9% for all vehicles), though newer data for such registrations does not seem to have been crunched.
Given the precarious state of many EU economies, pricey electric cars are likely a less appealing prospect for many consumers right now — and reducing the availability of subsidies to purchase them as consumer uncertainty rises certainly isn’t helping. While Germany’s robust domestic auto industry may be pushing electrification forward in the luxury segment globally, it doesn’t take a degree to understand that the vast majority of buyers are still extremely cost-driven. Without accessible, low-cost electric vehicles, customers are going to vote with their wallets.
With a further reduction in EV subsidies just a few months away, the effective cost of all electric vehicles in Germany is set to rise at the beginning of 2024, during what is typically the low season for car sales overall. Germany has an ambitious goal to have 15 million plug-in vehicles on the road by 2030, and the current economic climate is making meeting that challenge formidable.
As someone who just moved to Berlin from the West Coast of the United States, I’m a little shocked at how few EVs I see on the road here. Sure, Teslas are around — and you do see a ridiculous number of e-bikes and electric scooters — but I haven’t even spotted an ID.4 since I’ve been here! It’s purely anecdotal, but for a country that has long been a global automotive technology leader, that’s not encouraging.
If the global economy enters a rebound in 2024, it’s entirely possible that the dwindling subsidies won’t matter so much. New, more affordable EVs are also coming to market regularly, lowering the bar to entry. But it looks like plug-in sales in Germany are in legitimate danger of declining year over year at the moment. And while they will certainly surge again ahead of the next big consumer subsidy reduction in January, they also did so in December 2022 prior to the first subsidy cut.