Germany can boost socially fair e-car rollout without extra burden on budget - report
Clean Energy Wire
The new German government could implement its planned support for electric car purchases in a socially fair manner without an additional burden on public coffers, argues a report commissioned by a group of climate and social welfare NGOs. "Socially just and climate-friendly electric mobility is feasible. Politicians must finally help to make small, climate-friendly cars in particular more affordable,” the NGOs said.
The report compiled by think tank Green Budget Germany (FÖS) says that the government should finance price reductions for electric cars, as well as low-income leasing options, by increasing levies on combustion engine cars and reforming company car taxation.
The ramp-up of electromobility is key for finally reducing emissions in the transport sector, which have been flatlining for decades in Germany. A successful shift to electric mobility will also be crucial to secure the long-term survival of the country’s automotive industry. The new government plans to promote electric vehicles with new purchase incentives, but has yet to provide a detailed proposal. The choice for the new transport minister, Patrick Schnieder from the conservative Christian Democrat Union (CDU), suggests that profound policy shifts in the sector are unlikely.
Germany was aiming to have 15 million electric cars on the road by 2030, but sales collapsed after the previous government axed a popular subsidy programme after Germany's 2023 debt brake ruling, putting this target increasingly out of reach. Following a 27 percent-reduction in sales of new battery electric cars (BEV) in Germany in 2024, a total of 1.65 million BEVs were registered at the start of this year.
Policies that make combustion engine cars more expensive are particularly effective for climate protection, says the report, which was commissioned by environmental NGOS Friends of the Earth Germany (BUND) and NABU, umbrella group Climate-Alliance Germany, the country’s largest social welfare organisation Caritas, as well as the ACE Auto Club Europa.
The report urges the government to not repeat the previous support policy consisting of across-the-board purchase subsidies, given that circumstances have changed since then. “In the mid and high price categories, electric cars are already often cheaper than comparable combustion models,” the report states, adding that support for those models would therefore be a waste of money because people would buy them regardless of subsidies. Instead, purchase support should be focused on smaller cars and low-income households.
The NGOs called for a registration tax which would make small and efficient electric cars cheaper, while buyers of particularly climate-damaging luxury cars would have to pay up to 17,500 euros extra. They also favoured a social leasing model that would result in monthly payments of 70 and 150 euros, depending on the car model.
