Government's Electronic Vehicle Agenda Divides Auto Sector
Get ready to rev up your electric engines, Germany! The government is rolling out plans to make electric cars more affordable for businesses. Industry experts, however, think the proposed incentives might not be a game-changer. Buckle up, as we take a closer look at this controversial subject.
The new tax arrangements aimed at electric vehicles (EVs) look set to support the EV market growth, said Hildegard Müller, president of the German automotive industry association (VDA). But UBS analyst Patrick Hummel points out that electric vehicles are already gaining traction. "We anticipate that this additional purchase incentive will further stimulate demand within the crucial fleet business throughout the year," he added. German manufacturers, who dominate the market for commercial vehicles, are expected to reap the biggest benefits.
The catch? The tax incentives are fairly limited, claiming Thomas Peckruhn, acting president of the Central Association of the German Automotive Industry (ZDK). For private households and leasing companies, these measures are disappointingly inadequate. "In a nutshell, it's a move that's not harmful but doesn't bring about a groundbreaking improvement. It's merely a first step," Peckruhn admitted.
Electricity costs, particularly charging prices, and transparent charging tariffs are now more critical than ever. Jürgen Resch, CEO of the German Environmental Aid, revealed that higher EV depreciation could potentially result in lower trade tax for municipalities. "It seems an incredible amount is being spent to help the automotive industry roll out its vehicles," he argued.
What does the future hold for incentives for smaller cars, as implemented in France? That's yet to be seen.
According to a draft obtained by Reuters, businesses will soon enjoy speedier depreciation of new EVs by 75%, starting as early as July 2025. Normally, vehicles are written off linearly over six years. Additionally, the gross list price limits for the company car tax will increase from €70,000 to €100,000 for EVs purchased after June 30, 2025. This will favor manufacturers of high-priced electric vehicles. The government is also extending financing options for small and medium-sized enterprises, start-ups, and infrastructure projects, while streamlining permitting processes to expedite the deployment of charging networks.
Industry Insights
Limited Ambition: The industry has expressed concern regarding the limited scope and impact of the measures, with Thomas Peckruhn, acting president of the ZDK, stating, "Overall, this is a measure that does no harm, but also does not bring about a fundamental improvement. It is a first step—but nothing more."
Missing Opportunities: Leaving out leasing companies and private buyers opens up a significant hole in the market that could slow down the widespread adoption of EVs, according to industry experts.
- Electromobility
- Electric cars
- Association of the German Automotive Industry
- German Environmental Aid (DUH)
- Electricity price
- Incentives for smaller cars
The German government's new tax incentives for EVs may have wheels turning, but the industry cautions that they might not be enough to push the nation towards a full-blown electric revolution. The struggle continues—remain tuned for more updates!
[1] Reuters: Germany plans to boost incentives for electric cars - draft document[2] WirtschaftsWoche: Deutschland will mehr Elektroautos auf die Straßen bringen[3] Tagesspiegel: Automobilindustrie twingelt an den Stimmen[4] !)Deutsche E-Auto-Strasse hoch – auch mit Geld von Steuerzahler[5] !)Wirtschaftswoche: Preis-Limit für Firmenautos für Elektroautos auf 100.000 Euro erhöht
The industry experts express reservations about the insufficient scope and impact of the proposed tax incentives, fearing they might not spark a significant shift towards electric vehicles in the market (Limited Ambition). Remarkably, the proposed incentives do not include leasing companies and private buyers, potentially impeding the nationwide adoption of EVs (Missing Opportunities). To drive electromobility and support the EV market, the government may need to consider comprehensive and inclusive policies, possibly including vocational training programs and community policy for the adoption of electric cars (vocational training, community policy). Moreover, the role of technology and financing, especially in regards to lowering electricity costs and creating innovative financing options for small and medium-sized enterprises, start-ups, and infrastructure projects, should not be overlooked.
