Germany Ends Electric Vehicle Subsidies Immediately! This will impact other countries including the USA

Germany has decided to end its electric vehicle subsidy. On Wednesday, December 13th, German leaders announced the ending of these subsidies due to 2024 budget concerns. There was an environmental purchase premium for e-cars of up to 6,000 euros ($6,555 US).

On of the foremost proponents of E-Mobility in Germany, has now fully backtracked: Professor Ferdinand Dudenhöffer, Germany’s leading automotive analyst, just posted on LinkedIn: “That’s it for the EVs in Germany; its good if you haven’t written off the combustion engines, I was entirely wrong on the fatherland.”

Germany has killed the 4500 EUR EV subsidy as of today – because the government’s budget was rules unconstitutional by the German Supreme Court and they needed to cut subsidies wherever possible.

Germany has been of the forefront of electrification since former chancellor Angela Merkel proclaimed her support; German brands have aggressively pushed for the “transformation”, but customers haven’t followed along because of the high cost, the reduced utility and the hidden environmental impact of EV.s, stated Jens Meiner, chairman emeritus of WCOTY: “EV sales have been a massive disappointment in Europe and it seems that the pundits and politicians are moving away from it as fast as they can. I am not surprised, considering it’s an inferior product.”

“At the end of December 17, 2023, no new applications for the environmental bonus can be submitted..,” stated the German Minister of Economic Affairs and Climate Protection. The environmental bonus was introduced by the Grand Coalition in 2016. Since then, a total of around 10 billion euros has been paid out for 2.1 million electric vehicles. 

Those in favor of the subsidy stated that, “This decision is a blow to the mobility turnaround and climate protection. With the abrupt capping of the promotion of e-cars, the Minister of Economic Affairs is torpedoing the acceptance of electric driving in Germany.”

Germany’s move comes amid tighter restrictions on EV subsidies in France. As of Dec. 15, France effectively limited EV subsidies of up to 7,000 euros ($7,636 US) to electric cars made in Europe. Chinese-made vehicles, including the Tesla Model 3, are no longer eligible. The Model Y will still be eligible because Tesla makes the crossover at its Berlin-area plant.

Here in the USA, there are fewer electric vehicles that will qualify for the federal tax credits. Purchases of popular models like the Tesla Model 3 and the Ford Mustang Mach-E may no longer entitle buyers to tax savings because the cars do not meet tougher sourcing requirements.

Tesla stated on its website that while customers who take delivery of a qualified new Tesla and meet all federal requirements are eligible for a tax credit up to $7,500, “reductions are likely for certain vehicles in 2024. You must take delivery by 12/31/23 to qualify for full $7,500.”

The Treasury Department’s Dec. 1 update on the Inflation Reduction Act credit rules involving “foreign entity of concern” requirements, which include China, Russia, North Korea, and Iran impacts the tax credits for consumers. 

Other brands impacted include Volvo, 79% of Volvo is owned by Chinese automaker Geely, which means some Volvo models and its premium brand Polestar might be affected by this despite U.S. assembly. The 2024 Volvo EX30 electric SUV, will unfortunately not qualify. And a few models of the Audi Q5, BMW 330i, BMW X5, Genesis GV70, and Volvo S60 — no longer qualify for the EV tax credit

General Motors brands that are built with the Ultium platform are still eligible and that includes the new Blazer EV and Chevy Silverado EV coming out in 2024. What else is eligible for 2024, not that many vehicles, only 10 cars.

  • Chevrolet Bolt EV — $26,500
  • Chevrolet Equinox EV – $48,995
  • Ford F-150 Lightning — $49,995
  • Tesla Model 3 Performance — $50,990
  • Chevrolet Silverado EV — $51,895
  • Tesla Model Y Performance — $52,490
  • Chrysler Pacifica PHEV — $53,425
  • Chevrolet Blazer EV — $60,215
  • Cadillac LYRIQ — $58,590
  • Tesla Model X — $79,990

Some EVs, like the Ford Mustang Mach-E and Nissan Leaf, are only eligible for a partial credit of $3,750. Used vehicles have a maximum price of $25,000 and can qualify for a maximum credit of $4,000.

Starting in 2024, the 40% critical minerals requirement increases to 50%, then 60% in 2025, 70% in 2026 and 80% in 2027. The 50% battery components requirement increases to 60% in 2024 and 2025, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029.

Regulation changes are ongoing, so stay tuned for more updates.

Every government, not just Germany, should get politicians out of people’s lives, including deciding what kind of car they can manufacture and buy. Let the free market decide based on supply and demand. The consumer must be King, and the market must be free.

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