German media is reporting that subsidies for electric vehicles will be eliminated in 2024. The backdrop to this automotive drama involves the German government’s decision to terminate a seven-year subsidy program for new EV buyers, which provided up to €6,750. The subsidy, jointly funded by the state and automakers, became a casualty of the 2024 budget following budget cuts prompted by a constitutional court ruling on unused pandemic emergency funds. The decision has faced criticism from the Allgemeiner Deutscher Automobil-Club (ADAC) and opposition conservatives, who argue that ending the scheme will negatively impact local car manufacturers in the face of increasing competition from U.S. and Chinese brands.

On Monday, the economy ministry abruptly terminated the seven-year scheme as a consequence of revising the 2024 budget. This revision became necessary following a court ruling that created a significant 60 billion euro ($65.77 billion) deficit in the ministry’s financial plans. But German automakers are rumored to step in to cover the entire state share of funding, up to 3,000 euros, for those meeting specific criteria.

All Major German OEMs To Step In

Among those is BMW, Audi, Volkswagen and Mercedes-Benz. According to BimmerToday, but not confirmed by BMW, to qualify for this voluntary goodwill gesture, customers must have signed their purchase contract by yesterday at the latest, unaware of the impending government decision. The relief extends to those with imminent or recently completed deliveries in the remaining days of 2023, provided their BAFA application was rejected due to the government’s abrupt funding cessation.

The German magazine also suggests that BMW may also extend support to customers whose new car deliveries, initially planned for 2023, were postponed to 2024 due to production reasons. However, for those expecting delivery next year, no solution seems apparent, as the government’s sudden budget cuts indicate an immediate cessation of funding. As you’d expect, EV sales might take a hit in 2024 following this governmental decision, but it remains to be seen what the overall impact will be.

On Tuesday, Volkswagen announced its commitment to cover the entire subsidy amount of 6,750 euros for private customers in Germany who placed orders for eligible vehicles from the all-electric ID. range before December 15. For registrations occurring between January 1 and March 31, Volkswagen specified a reduced subsidy of 4,500 euros, aligning with the planned reduction in the subsidy scheme. In a similar move, Volkswagen’s Audi pledged to fully fund the subsidy for cars ordered before December 16, with deliveries scheduled by the year’s end.

Mercedes-Benz echoed this commitment, stating it would cover the full subsidy for orders delivered and registered between December 18 and 31. From January onwards, the company would assume its portion of the subsidy. Stellantis, on Monday, declared its intention to cover the entire subsidy until December 31, followed by a reduced subsidy for vehicles registered by February 29.

[Source: BimmerToday & Reuters]