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Finally catching up: What powers the EV uptake in Germany?

In the run-up to the European Union (EU) 2020/21 mandatory new vehicle fleet CO2 targets, the German passenger car market shows an increasing rate of electrification.

In the run-up to the European Union (EU) 2020/21 mandatory new vehicle fleet CO2 targets, the German passenger car market shows an increasing rate of electrification. This uptake is boosted by rising sales of battery electric (BEVs) and plug-in hybrid vehicles (PHEVs), both to a similar extent. In total, the number of electric vehicle (EV) registrations in Germany from January to October of this year (86,316) surpassed EV registrations in the significantly smaller markets of France (48,231), the United Kingdom (54,337), and Norway (67,653) in the same timeframe. Thereby, Europe’s largest passenger car market also became the largest EV market on the continent in absolute numbers. In relative numbers, the average new car EV share over the past 12 months in Germany (2.8%) caught up with France and the UK (both also at 2.8%) but is still far lower than in Norway (56.1%) or Sweden (11.0%).

Monthly EV registrations, 12-month rolling mean of EV registrations and share in Germany, Norway, UK, France, Sweden
Monthly EV registrations in Germany, and 12-month rolling mean of EV registrations and EV share in Germany, Norway, United Kingdom, France, and Sweden (Sources: KBAOFVSMMTSDESSCB)

In NorwaySwedenFrance, and, to a lesser extent, in the UK, EV policies are based on a carrot-and-stick approach: A lower tax or even a cash bonus for EV purchases in combination with a higher tax (malus) for vehicle purchases with higher CO2 emission levels, following a polluter-pays principle. The German EV policy, in contrast, focuses mostly on subsidies and tax breaks without an emissions-based financial counterweight. At the national level, since mid-2016 the German government grants a 2,000 EUR subsidy (Umweltbonus) on the purchase of BEVs and fuel cell EVs, and 1,500 EUR on the purchase of PHEVs with a CO2 emission level below 50 g CO2/km. As a condition, the net list price of the vehicle must be below 60,000 EUR and the car company discounts the purchase price by the subsidy amount. In addition, since January 2019, taxes are reduced for new EVs used as company cars (64% of all new passenger cars in Germany in 2018 are used as company cars.) Apart from these national policies, several German states and cities provide additional EV purchase incentives. The development of the EV charging infrastructure is also supported by subsidies and tax benefits at the national, regional, and local level.

Since the EV purchase subsidy was introduced in mid-2016, the number of new registrations increased from about 1,500 to more that 10,000 per month in October 2019. The patterns of the BEV and PHEV markets, however, are quite different: While BEV registrations steadily rose, PHEV registrations suddenly dropped by 42% in late 2018 before rebounding by around mid-2019. So, what happened?

For BEVs, the increase in registrations strongly correlates with the introduction of new models. For instance, a battery update for the VW e-Golf and the introduction of all-electric Smart Fortwo and Forfour models resulted in a peak of BEV registrations in late 2017 and early 2018. Increased registrations of the Smart Fortwo BEV during this period are partly linked to the vehicles used in the refurbishment of Daimler’s former carsharing service ‘car2go’ in Stuttgart. Since the end of 2018, the BMW i3 and the Renault Zoe were updated with increased battery capacity, Tesla introduced the Model 3, and various manufacturers introduced battery-electric SUV models, like the Hyundai Kona and Audi e-tron. And again, we see the effect of a carsharing fleet being refurbished with BEVs, this time in mid-2019 when VW’s ‘We Share‘ in Berlin acquired 1,500 e-Golfs. The introduction of the reduced company car tax rate for EVs in January 2019 might have helped to spur new model BEV sales, in particular for upper-segment BEVs, such as the Audi e-tron or the Hyundai Kona.

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