Increasing the Adoption of Electric Vehicles and Ensuring a Socially Equitable Process
In a bid to promote electric mobility and reduce emissions in the transport sector, German NGOs have proposed a registration tax that would make small and efficient electric cars cheaper, while buyers of luxury cars would pay up to 17,500 euros extra. This strategy is aimed at encouraging the adoption of electric vehicles (EVs) without significantly increasing public expenditure.
Following a 27 percent reduction in sales of new battery electric cars in 2024, a total of 1.65 million BEVs were registered at the start of this year. The success of the shift to electric mobility is vital to secure the long-term survival of Germany's automotive industry.
The German government can implement socially fair electric car purchase support without additional burden on public coffers. This can be achieved by relying on mechanisms such as incentivizing EV purchases through targeted subsidies funded within existing recovery and resilience plans, avoiding broad scrappage schemes for fossil-fuel cars, and focusing on large-scale investments that support decarbonization and industry jobs while steering funds from federal budgets combined with EU recovery funds.
A report by Green Budget Germany and other NGOs recommends limiting direct state-funded premiums exclusively to electric cars, preventing additional fiscal drain and providing stronger incentives for greener vehicles. The new German government's green rescue package exemplifies this approach, dedicating €2.2 billion to promote EVs and fleets, supporting job creation and decarbonization without extending costly scrappage schemes for polluting cars.
Additional funding for zero-emission transport, such as buses, is structured through competitive project funding covering the extra cost difference between zero-emission and diesel vehicles—up to 80%—but relies on federal budget approvals and co-financing from the European Union’s Recovery and Resilience Facility, mitigating direct government spending.
The NGOs argue for a socially fair and affordable electric mobility. To achieve this, they suggest focusing purchase support on smaller cars and low-income households. They propose a registration tax and a social leasing model as alternatives to across-the-board purchase subsidies for electric cars. The social leasing model would result in monthly payments of 70 and 150 euros, depending on the car model.
The report does not recommend across-the-board purchase subsidies for electric cars, suggesting a shift in focus to smaller cars and low-income households. The NGOs favor a social leasing model over broad subsidies, as it is more targeted and affordable for both the government and consumers.
The choice for the new transport minister, Patrick Schnieder from the Christian Democrat Union, suggests profound policy shifts in the sector are unlikely. However, the new government plans to promote electric vehicles with new purchase incentives. The successful shift to electric mobility is crucial for Germany's commitment to carbon neutrality by 2045 while maintaining industrial competitiveness within a pragmatic fiscal framework.
The report, commissioned by environmental NGOs BUND, NABU, Climate-Alliance Germany, Caritas, and ACE Auto Club Europa, states that making combustion engine cars more expensive is effective for climate protection. The NGOs advise against repeating the previous support policy of across-the-board purchase subsidies, suggesting that circumstances have changed since then.
The report was reproduced with permission from Clean Energy Wire. The success of Germany's electric mobility strategy will play a significant role in the country's efforts to combat climate change and secure the future of its automotive industry.
[1] Green Budget Germany (2022). Electric Mobility - Financing a Green Shift in the Transport Sector. Retrieved from www.GreenBudgetGermany.org
[2] European Commission (2021). Recovery and Resilience Facility. Retrieved from ec.europa.eu/info/strategy/recovery-plan-europe_en
[3] German Federal Government (2021). Coalition Agreement 2021. Retrieved from www.bundesregierung.de
- As the shift towards electric mobility is vital for the long-term survival of Germany's automotive industry, the German government could consider implementing targeted subsidies for electric cars, as outlined in the report by Green Budget Germany and other NGOs, to make electric mobility socially fair and affordable, while avoiding additional burden on public coffers.
- To provide stronger incentives for greener vehicles and ensure a fair and affordable transition to electric mobility, NGOs recommend focusing purchase support on smaller cars and low-income households, instead of broad across-the-board subsidies, and suggest alternatives such as a registration tax and a social leasing model.
