After years of doling out cash to car buyers for the purchase of more eco-friendly cars, Germany is planning a major shake-up of its subsidy system in the coming years.
From January 1st, 2023, financial incentives will only be available for vehicles with a “proven positive climate protection effect”, meaning pure electric cars rather than those that combine battery power with a traditional combustion engine.
That means that subsidies for purchasing hybrid plug-in cars will end entirely in December 2022, while subsidies for electric cars will gradually be reduced.
“We want to sharpen the focus in the future promotion of e-cars and focus more on climate protection,” Economics Minister Robert Habeck told Funke Mediengruppe on Wednesday.
“In our opinion, plug-in hybrids are marketable and no longer need public funding.”
As set out in the coalition pact of the SPD, Greens and FDP parties last November, the government wants to reform the criteria it uses to allocate state aid and funding to electric cars.
Currently, car owners can receive up to €9,000 when purchasing an eco-friendly vehicle, but this is set to be cut by more than half to €4,000 in 2023 and then again to €3,000 in 2024 and 2025.
With the state funding set to be reduced, it seems many drivers in Germany have taken the opportunity to submit their application for the subsidy in the nick of time.
According to the Federal Office for Economics and Export Control, funding applications for around 625,000 hybrid and electric cars were submitted to the government in 2021 – more than double the figure for 2020.
“The funding is still at a high level and therefore interesting for consumers,” Habeck said.
Electric vehicles also get favourable rates on certain types of vehicle and road tax in Germany.
The Economics Ministry has said it will put together a draft law outlining the plans, which will then be reviewed by the cabinet.