Electromobility still needs incentives

New government, new plans and goals. The New Year’s resolution for the automotive market: No fewer than 15 million electric cars should be driving on German roads by 2030. But such a goal was already ambitious in 2010, when the government at the time wanted one million e-cars on the roads by 2020. The outcome is well known. With its clear focus on an environmental policy, the new government is now extending the purchase incentives for e-cars by another year until the end of 2022. The hope: to keep electric cars attractive to end customers and thus boost registrations. But how have the incentives performed over the past year? And how have registrations changed in relation to them? JATO Dynamics took a closer look at the figures for the period between January and October and compared them to Italy and France to see if incentives are really working.

Germany is a consistent country when it comes to incentive

Anyone who currently buys an all-electric vehicle (BEV) in Germany receives a subsidy for it, half of which is paid by the manufacturers and half by the government. Since the start of the Covid-19, the government has even doubled the state’s share through an innovation premium. This means that buyers of an electric car with a net list price of up to 40,000 euros can get an reimbursement from up to 9,000 euros.

What is striking about the German incentive development is that although there is a “hurdle” – the incentive can only be applied for after purchase and registration with the responsible agency BAFA – the amount of the incentives has remained very constant. And so have the registration figures. The incentive premium has always hovered around 30 percent during the period under review, regardless of the registration figures.

One special effect, however, is noticeable in all markets: at the end of each quarter, there are sometimes more, sometimes less pronounced fluctuations. For example, Tesla currently sells three quarters of its vehicles in the last month of the quarter, especially the Model 3. This sales strategy sets Tesla apart from the other manufacturers and is responsible for the strong peak in registrations.

The lower the incentives, the lower the interest

In France and Italy, there is a clear correlation between demand and incentives. In France, car buyers in 2020 received an environmental bonus of 7,000 euros for a purchase price of up to 45,000 euros. In July 2021, the bonus was then reduced by 1,000 euros. The consequence: Along with the lower subsidy, sales of BEVs also plummeted.  In one fell swoop, sales dropped from 12,000 vehicles in June to around 4,000 in July. It was not until September that the market had recovered to some extent, with more than 10,000 e-cars sold.

In Italy, e-car buyers receive of up to 6,000 euros when purchasing a BEV with a net price below 50,000 euros. A further €2,000 subsidy for BEVs was also available. Analysts observed comparable slumps in Italy at the end of the third quarter.  When the subsidies disappeared, registrations also plummeted. The Italian incentive system is fed by a large pot that is available for this purpose. This pot is currently empty, there are no more funds available.

However, the curve also suggests that there is less interest in e-cars in Italy. Electromobility clearly lacks persuasive power here. It will be interesting to see when and to what extent the enthusiasm to buy will pick up again.

It will also be exciting to see how Germans’ enthusiasm for e-cars develops once the subsidy expires at the end of 2022. The will to continue switching to zero-emission mobility will largely determine whether the new German government can meet its target of 15 million e-cars this time around.

More information on JATO can be found here.

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