The German government has abruptly ended its subsidies for electric vehicles (EVs), which were originally slated to continue until the end of 2024, as reported by Reuters on December 16. The controversial decision stems from a budget crisis caused by a shocking constitutional court ruling in November, where the court determined that the government breached a constitutional debt rule when it transferred EUR60bn earmarked for pandemic support to a climate fund. This ruling left a substantial EUR60bn gap in the 2023 spending plan, forcing the government to scale back the 2024 budget and shelve some programs aimed at accelerating Germany’s green transition. Under the revised EV subsidy plan, subsidies already applied for will be paid out, but no new applicants will be accepted from December 17.

Since 2016, the German government has spent approximately EUR10bn on subsidizing the purchase of around 2.1 million electric cars. Under the previous EV subsidy plan, individuals were eligible for a subsidy of up to EUR4,500 for buying a battery-powered or fuel-cell vehicle by the end of 2023, and the subsidy was set to decline to EUR3,000 from January 2024. The cancellation of the subsidy plan was a severe blow to German EV manufacturers, which are already grappling with intense competition from counterparts in China and the US. Moreover, the cancellation also raised concerns that it might jeopardize Germany’s plan to have 15 million electric cars on the roads by 2030.

Sources:

https://www.reuters.com/business/autos-transportation/germany-end-e-vehicle-subsidy-programme-2023-12-16/

https://www.reuters.com/world/europe/german-budget-consensus-under-fire-over-evs-agricultural-diesel-2023-12-17/

https://www.cleanenergywire.org/news/germany-has-subsidised-total-two-million-electric-cars