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Global Economy

E-car premium is reduced

The federal government has agreed on new rules for subsidizing electric cars. According to this, cars with electric drives will also be subsidized by the state beyond 2022. However, subsidization is to be reduced and limited to a specific total budget.

Economics and Climate Protection Minister Robert Habeck (Greens) said that electric mobility had made the transition to the mass market. E-vehicles will no longer need government subsidies in the foreseeable future. The transition to that point is now being designed with a new funding concept.

The funding should be concentrated on purely battery electric vehicles. "This ensures more climate protection in transport and uses the available budget funds in a targeted manner."

Subsidies of 3.4 billion euros

A funding cap is now planned. According to government circles, a total of 3.4 billion euros is available for the promotion of pure electric cars – 2.1 billion euros for 2023 and 1.3 billion euros for 2024. The funds for the environmental bonus are in the climate and transformation fund provided by the federal government, whose economic plan is to be approved by the cabinet tomorrow. "When the funds are exhausted, the funding ends with the environmental bonus," says the ministry.

The question is whether there is enough money – or whether applicants will get nothing when the pot is empty. In coalition circles it was pointed out that from 2023 plug-in hybrid vehicles will no longer be funded – this funding will therefore be saved. According to the responsible Federal Office of Economics and Export Control, as of July 1, 2022, a total of more than 1.3 million applications had been submitted for the environmental bonus – around 741,000 of them for purely electric vehicles and around 576,000 for plug-in hybrids. The funds for 2022 amount to five billion euros.

Several reform steps

Several reform steps are now planned for purely electric cars. As a first step, according to the ministry, federal funding for cars that cost less than 40,000 euros will be reduced from the current 6,000 to 4,500 euros from the beginning of 2023. For cars that have a net list price of 40,000 euros to 65,000 euros, there should be 3000 euros instead of the previous 5000 euros. For plug-in hybrid vehicles, for which there is currently a bonus of up to 4,500 euros, the subsidy is due to expire at the end of 2022. From September 1, 2023, funding will be limited to private individuals – companies will then get nothing. According to the ministry, funding for small businesses and non-profit organizations is still being examined.

From January 1, 2024, the purchase premiums are to drop further to 3,000 euros – but only for cars that cost a maximum of 45,000 euros. More expensive vehicles therefore no longer receive state subsidies. In addition to the state premiums, there is also a so-called manufacturer's share, which could also decrease. Important for buyers of e-cars: The application for funding should continue to require vehicle registration.

Habeck had already suggested in the spring that the subsidy for plug-in hybrid cars should be canceled earlier than planned at the end of 2022. According to Habeck's plans, there should be less money from the state for pure electric cars in the future.

According to the agreement that has now been reached, the tax advantages of electric cars and plug-in hybrids in the company car regulation are to be retained, and the Greens in particular are actually in favor of changes. FDP parliamentary group leader Carina Konrad said: "The electric car purchase premium is now being gradually reduced to a reasonable level and gradually phased out." The scarce budget funds must be used in a targeted manner.

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