Things are looking up for environmentally friendly mobility on German roads! This impression could be conveyed by the latest data from the Federal Motor Transport Authority regarding newly registered electric cars. Indeed, the figures are impressive at first glance. From January to August, the number of newly registered battery-powered electric cars jumped by 56% to 355,575 units. Their share of total new registrations was just under one-fifth. In August, this figure even reached almost one-third. Thus, Germany was nearly on par with Scandinavia, where electric cars are in high demand.

However, the growth rates in the largest economy in the EU are deceptive. The surge is based on government subsidies. The environmental bonus proves to be the driver of this dynamic. The surge in the previous month is primarily a result of preemptive actions. It stems from the fact that the coalition in Berlin ceased its public funding support for commercial electric car purchases a month ago. Since September 1st, the federal government has limited the bonus to private individuals only. Given this context, the zenith of the electric car surge has, for the time being, been surpassed. Industry experts are apprehensive about a decline in new registrations. The electric car bubble in Germany is bursting, as the proportion of company cars in the acquisition of battery-powered vehicles recently accounted for three-quarters of all newly registered electric cars. In early 2024, the government plans to further reduce the subsidy list.

Electric cars are relatively expensive. Therefore, the discussion about the purpose of such subsidies for the automotive industry always carries the accusation that modern climate-neutral mobility is only for higher-income individuals. On average, the battery accounts for up to 40% of the cost of an electric car. Due to increased purchasing and production costs resulting from high inflation, German manufacturers are currently finding it difficult to significantly reduce the costs of electric car production. Automotive expert Ferdinand Dudenhöffer warns of a "price shock" next year if the purchase incentives are reduced once again. German-made electric cars are likely to remain at a high price level in the future, despite the economic downturn and increasing competition from abroad putting pressure on BMW, Mercedes-Benz, and Volkswagen to offer discounts. The economic downturn due to higher interest rates is dampening demand. In addition, emerging manufacturers are entering the fiercely competitive European market, which could lead to price wars.

Nonetheless, these mechanisms of the free market are not sufficient to stabilize the electric vehicle segment. The goal of the current administration to have at least 15 million electric cars on German roads by 2030 is proving to be a utopia. At the end of 2022, the stock of electric cars in Germany exceeded 1 million units for the first time. Despite a 64% increase, this represents only 2% of the total car stock of over 49 million. Cars with internal combustion engines continue to dominate the streets.

In light of these facts, the pressure is growing on Berlin to reform and relaunch the environmental bonus for electric cars. The development shows that the transition to sustainable mobility is not achievable without public support. The electric vehicle segment in Germany is not yet a self-sustaining business model. Significantly higher electricity prices are further dampening demand, making a noticeable reduction in environmental bonuses counterproductive. Government incentives would only become unnecessary once the electric vehicle market stabilizes at a higher volume. However, until then, political action necessitates a stronger resolve. At the beginning of September at the IAA, Chancellor Olaf Scholz promised infrastructure incentives for electric charging stations: A legislative initiative will be launched to require gas stations to provide fast charging stations. This could have been implemented much earlier, demonstrating that the government has been too sluggish in its actions. A convincing determination looks different.