Additional EV Incentive Cuts in 2024: A Grim Outlook
In a shocking turn of events, it seems that the electric vehicle (EV) industry will be facing even more hurdles in 2024. The year 2023 has already seen a significant decrease in new registrations of plug-in electric cars in Germany, mainly due to the end of EV incentives for business buyers. However, it appears that things will worsen in the coming year.
Germany, known for its dedication to sustainable transportation, has been a leading market for EVs. In September 2023, new passenger car registrations in Germany reached a staggering 224,502, similar to the numbers recorded the previous year. From January to September 2023, a total of 2,138,066 new cars were registered, a 14.5 percent increase compared to the same period in 2022.
Unfortunately, the plug-in electric car segment experienced a significant decline in new registrations due to the end of incentives. In August, there was a sudden surge in electric car registrations as buyers rushed to take advantage of the incentives before they expired. This resulted in a 171 percent year-over-year increase in all-electric car registrations, accounting for nearly 32 percent of the total market share.
However, the tides quickly turned in September. Total new plug-in electric car registrations plummeted by 35 percent compared to the previous year, culminating in just 21 percent of the total volume. Battery electric car (BEV) registrations also took a hit, decreasing by 29 percent year-over-year to slightly over 14 percent of the market. Similarly, plug-in hybrid car (PHEV) registrations declined by 46 percent, marking the ninth consecutive month of year-over-year decline.
These drastic fluctuations in sales are not uncommon during periods of incentive changes. The expectation is that sales will recover in the short term but will face immense challenges as additional EV incentive cuts are expected in early 2024. The real test lies in determining the true sales potential of EVs without government support.
As of now, plug-in electric cars account for approximately 24 percent of total new passenger car registrations in Germany, with over 510,000 units registered this year alone. The breakdown shows that BEVs constitute 18.1 percent of the market share, while PHEVs represent 5.8 percent.
Looking back on previous years, the numbers are striking. In 2022, Germany registered over 832,000 new plug-in cars, accounting for 31.4 percent of the total market share. This is a significant increase compared to 2021, which saw just over 681,000 registrations.
Examining the brands leading the way in the German EV market, September 2023 saw Mercedes-Benz at the forefront with 6,451 new registrations, followed closely by Opel with 4,670. Tesla secured the third spot with 4,216 registrations, dominating the all-electric car segment.
Interestingly, the usually dominant Volkswagen brand lagged behind, indicating that it was particularly affected by the change in EV incentives. This suggests a higher ratio of company car sales within the brand.
Analyzing the year-to-date figures, Volkswagen currently holds the top position with 61,003 plug-in car registrations, followed by Mercedes-Benz with 57,220 and Tesla with 51,408. If we exclude plug-in hybrids, Tesla secures the second position, trailing behind Volkswagen.
When it comes to individual models, the Tesla Model Y has emerged as the most registered all-electric car in Germany, with 38,608 units sold year-to-date. The Volkswagen ID.4/ID.5 duo follows closely behind with 29,353 registrations, experiencing a remarkable 132 percent increase compared to the previous year. The Volkswagen ID.3 also performed well, recording 17,995 registrations and a 69 percent increase. Other noteworthy models include the Fiat 500 electric, Skoda Enyaq iV, Audi Q4 e-tron, Cupra Born, and the Tesla Model 3.
Despite the challenges faced this year, Germany remains committed to the transition to electric mobility. However, the impending additional EV incentive cuts in 2024 present a daunting road ahead. The industry’s resilience will be tested as it strives to continue its growth and overcome the obstacles that lie ahead.
(Note: This article does not include notes or supplementary information.)