GERMANY is set to cut financial incentives offered for the purchase of new electric vehicles from next year, as the popularity of electric models makes government subsidies unnecessary.
In a report by Reuters this week, the German government also outlined its intention to completely scrap incentives for plug-in hybrid vehicles from the end of 2022.
“Electric vehicles are becoming increasingly popular and will no longer need government subsidies for the foreseeable future,” said German Economy Minister Robert Habeck.
Under the proposal, subsidies for pure electric vehicles (BEVs) priced below €40,000 (A$58,530) will be reduced from €6,000 (A$8,780) to €4,500 (6 A$585) starting early next year, then €3000 ($A4390) during 2023.
BEVs priced above €40,000 will have their incentive value reduced from €5,000 (A$7,320) to €3,000 (A$4,390) from January 1.
There is currently no subsidy offered on BEVs priced above €65,000 (A$95,110), with the upper threshold to be reduced to vehicles priced above €45,000 (A$5,880). ) from next year.
In addition, subsidies for company cars will be abolished and only private customers will benefit from the program. The program will fully expire once the allocated sum of €3.4 billion (A$4.98 billion) has been spent.
Reuters reports that the German government will also end incentives paid on plug-in hybrid vehicles (PHEVs) from the end of 2022 due to doubts about the environmental qualities of the technology.
“For the upcoming funding phase, we are placing a clear focus on climate protection and concentrating the funding on purely battery-electric vehicles,” Habeck added.
BEV sales in Germany nearly doubled to 328,000 units in 2021 from a year earlier, thanks in part to incentives offered by the country’s government. There are now 600,000 electric vehicles on German roads, and more than a million if hybrid vehicles are included in the count.
Those figures put the share of pure electric vehicles (BEVs) in the country’s new car registration tally at around 14%, Reuters reports, with Volkswagen and Tesla models being the most popular.
The German Automotive Industry Association (VDA) criticized the planned subsidy cuts in a statement, calling the decision “incomprehensible”.
“In times of rising costs and burdens, the decision to unilaterally and completely cut funding is incomprehensible,” said VDA President Hildegard Mueller.
Ms Mueller also said the decision to exclude company cars from the initiative sends the wrong message to buyers, saying “a shift to electric mobility is needed across all fleets”.