Germany: tax burden of car ownership for individuals, by selected car and cost types
Germany's cost of car ownership for individuals reveals interesting insights into the country's automotive landscape. Despite the abrupt end of governmental subsidies for new electric vehicle purchases, compact petrol sport-utility vehicles maintained a higher cost of ownership than battery-electric SUVs. Higher energy taxes on fossil fuel vehicles contribute to this gap in the cost of ownership. However, the comparison between small petrol cars and small battery-electric cars shows that the former had a lower cost of ownership, despite a higher tax burden.
The positive impact of Germany’s environmental bonus
The rise of electric vehicles is evident in Germany, with battery-electric vehicles constituting around 18.4 percent of car sales in 2023. Comparatively, the share of diesel among new sales had been steadily decreasing since 2015, and petrol cars also dropped in popularity between 2018 and 2022. This shift away from fossil fuel was partly influenced by governmental subsidies, which impacted the cost of purchasing an electric vehicle until December 2023. In 2023, new cars with a net list price up to 40,000 euros were eligible for an environmental bonus of 6,750 euros, with two-third of this bonus coming from State subsidies. For leased and used electric cars, the State’s share of this bonus decreased to 50 percent, but represented a sizeable advantage for consumers by making electric vehicles a more affordable option at acquisition, which is the stage when electric vehicles tend to be pricier than their fossil fuel counterparts.
Consumer interest remains a challenge
While the abrupt end of State subsidies for electric vehicles could negatively impact electric vehicle sales, as it increases the total costs of ownership for these vehicles due to a high base price, it will impact companies the most. Nearly 1.1 million of environmental bonus applications were made by companies since the start of the program, compared to some 931,700 applications from individuals. In fact, over half of German consumers would still consider petrol internal combustion engine vehicles when buying a car, compared to some 28 percent considering electric propulsion as of March 2024.
The positive impact of Germany’s environmental bonus
The rise of electric vehicles is evident in Germany, with battery-electric vehicles constituting around 18.4 percent of car sales in 2023. Comparatively, the share of diesel among new sales had been steadily decreasing since 2015, and petrol cars also dropped in popularity between 2018 and 2022. This shift away from fossil fuel was partly influenced by governmental subsidies, which impacted the cost of purchasing an electric vehicle until December 2023. In 2023, new cars with a net list price up to 40,000 euros were eligible for an environmental bonus of 6,750 euros, with two-third of this bonus coming from State subsidies. For leased and used electric cars, the State’s share of this bonus decreased to 50 percent, but represented a sizeable advantage for consumers by making electric vehicles a more affordable option at acquisition, which is the stage when electric vehicles tend to be pricier than their fossil fuel counterparts.
Consumer interest remains a challenge
While the abrupt end of State subsidies for electric vehicles could negatively impact electric vehicle sales, as it increases the total costs of ownership for these vehicles due to a high base price, it will impact companies the most. Nearly 1.1 million of environmental bonus applications were made by companies since the start of the program, compared to some 931,700 applications from individuals. In fact, over half of German consumers would still consider petrol internal combustion engine vehicles when buying a car, compared to some 28 percent considering electric propulsion as of March 2024.
