Germany’s Economy Ministry wants to cut EV subsidies and end PHEV support altogether by the end of 2022

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Reports from Germany indicate that the country’s Federal Ministry for Economic Affairs and Climate Action has proposed to phase out subsidies for electric vehicle purchases until 2025 and completely eliminate any benefit for consumers purchasing plug-in hybrid electric vehicles (PHEVs) by the end of this period. year. The German Automotive Industry Association (VDA) opposes, saying PHEVs remain key to EV adoption.

Germany is a country synonymous with automobiles. With household names like Mercedes-Benz, Volkswagen, Audi and Porsche all calling the EU country, it’s no wonder. As the EU strives to tackle climate change, much of its legislation has marked the end of ICE vehicle sales.

European automakers like those mentioned above have followed suit, promising to go all-electric over the next decade. To accelerate the adoption of electric vehicles around the world, many countries have encouraged their citizens to switch to an electric vehicle more quickly.

For example, China offers subsidies for electrified purchases, especially for new electric vehicles (NEVs), a popular vehicle segment in the country. The United States offers both federal and state tax credits, depending on where you live.

Germany is no different, currently offering subsidies of €6,000 ($6,484) for EV purchases. According to a recent report, however, the German Ministry of Economics is seeking to reduce these subsidies for electric vehicles.

The next all-electric Mercedes-Benz EQE / Source: Mercedes-Benz

Will Germany hamper its subsidies for electric vehicles? Not if the VDA has a say

News of the potential subsidy reduction was reported by Bloombergas one person familiar with his plans said Germany’s Federal Ministry for Economics and Climate Affairs wants to completely phase out subsidies for PHEVs before the end of the year and start scaling back BEV benefits next year.

The plan, originally announced by the Frankfurter Allgemeine Zeitung newspaper, said the Economy Ministry’s motive was to pivot German subsidies towards climate protection, and that legislation to that effect is currently being discussed.

In addition to stopping PHEV purchase subsidies, the report says current EV subsidies (€6,000) will be lowered to €4,000 ($4,366) in 2023, then to €3,000 in 2024 and 2025 before disappearing entirely. Economy Minister and Greens party member Robert Habeck spoke of the decision:

We want to refine our support for electric cars and focus more on climate protection. In our view, plug-in hybrids are marketable and no longer need public funding.

The VDA car industry lobby, made up of more than 620 German companies, strongly disagrees. According to its manager Hildegard Mueller, ending PHEV subsidies “would endanger the rise of electric mobility and ignore the realities of consumers in Germany. Plug-in hybrids serve as pioneers for the transition to electric mobility.

The Greens’ other partners in the German government also oppose the proposed cuts, saying PHEVs also contribute to climate goals.

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