There are to be 30 million e-cars on the roads in the EU by 2030. The countries and the EU itself are therefore boosting the market with premiums and tax benefits for e-car drivers. Here is an overview.
The purchase premium
Many EU countries promote e-cars through direct premiums on the purchase of a new car. Romania is the front-runner in Europe. There, you can get about 10,000 euros as a subsidy for a new electric car. Croatia also offers around 9,100 euros. In Germany, the recently agreed extension of the innovation bonus doubles the environmental bonus, giving around 9,000 euros, and in some cases even up to 11,000 euros, for the purchase of an electric car. As recently as 2019, the bonus in Germany was only 4,000 euros. On average, the sales price of an e-car was thus about 17% below the standard price. In Norway, vehicles were sold for an average of 35% less at the same time. Import tax and value-added tax are also waived in Norway. This means that an e-car is significantly cheaper there than a comparable combustion car. These monetary advantages are also reflected in the market share of e-cars in pioneering Norway: last year, over 50% of new cars there were e-cars. In Belgium and Denmark, where there is no purchase premium, the e-car market lags far behind. In Poland, where a purchase premium was only introduced in mid-2020, the market share of e-cars is still very low. However, the introduction of the premium is a success. In 2020, the share of e-cars in new car registrations has increased by 53%. The premium is 15% of the purchase price, but may not exceed about 4,200 euros. In France and Slovenia, the premiums are slightly lower than in Germany, at around 7,000 euros. These countries are followed by Italy, Spain, Sweden and Ireland, where they are between 5,000 and 6,000 euros. The level of premiums has been raised in many countries in recent years after the countries have felt real success in the shift to greener mobility.
the EU only recently approved a subsidy programme for companies wishing to convert their vehicle fleets and company cars to green alternatives. The German Federal Ministry of Transport (BMVI) had applied for 507 million euros. With the measure, about 80% of the price difference between a combustion engine and an e-car can now be compensated by the companies. The installation of filling and charging stations is also supported with 80%, but the companies have to make this infrastructure accessible not only to their employees, but also to the public.
The German government's goal is to have 7 to 10 million e-cars on the roads by 2030. In addition, 1 million charging stations are to be available to these vehicles. By the end of 2022, 50,000 of these should already be installed. For private households, there is also a subsidy for the purchase of a charging station. Support is also being provided for the conversion of fleets of tradesmen, delivery services, taxi companies and car rental or car sharing companies, in order to be able to convert a large proportion of commercially used vehicles in Germany to greener drive systems.
The bonus just mentioned for the purchase of a new e-car will initially be continued in Germany until 2025. The previously existing environmental bonus is now supplemented by the innovation bonus, so that the subsidies have increased considerably. Tax benefits additionally support e-car drivers.
In the public sector, the Federal Government is promoting the switch to zero-emission buses. 600 million euros from the energy and climate funds have been available for this since 2018. The purchase of the e-buses must be at least 5 per application, then the additional costs are subsidised at 80%, similar to the subsidies for companies. The funding is given preference in areas with high air pollution, for example in conurbations where there is also an environmental zone.
In addition to these subsidies, Germany invests in research and development programmes for e-mobility. These relate, for example, to the climate, environmental and resource protection of the vehicles as well as their contribution to increasing the quality of life and sustainable urban development.
After the car industry suffered greatly during the Corona pandemic in France, as in other countries, the French government is going on the offensive with an extensive subsidy programme. The purchase premium for private individuals will be increased by 1,000 euros to a total of 7,000 euros. For companies it is 5,000 euros per vehicle. In future, public authorities must use electric, hybrid or hydrogen drive systems for at least 50% of their new vehicle purchases. An interest-free loan was introduced to support citizens who can no longer use their vehicles due to the stricter regulations in the environmental zones. Vehicles for which a loan is approved must emit no more than 50 g/km of CO2, i.e. they must be purely electric or hybrid.
In addition, to support the increased number of e-cars on the roads, the number of charging stations is to be increased to 100,000 by the end of 2021. This target was originally set for the end of 2022. Municipalities and local authorities are also to create more incentives for e-car drivers.
Furthermore, the French state wants to invest 1 billion euros in the promotion of e-car technology. Production chains are to be digitalised and the automotive industry is to be ecologically restructured. For example, the production of vehicles should be CO2-neutral within the next few years. In addition, the French automotive industry commits to increase the production of electric, plug-in hybrid and hybrid vehicles to 1 million vehicles by 2025. They also want to invest 1 billion euros themselves in the alternative technologies, thus advancing the development of battery and hydrogen-powered vehicles.
Regarding the new laws on low emission zones, the French state remains tough. Senators who challenged the new requirements for urban areas were unsuccessful. According to the law, all conurbations with more than 150,000 inhabitants in France must set up an environmental zone by the end of 2024. For the areas where air pollution is particularly severe, it will also be prescribed when successively further environmental stickers must be banned: the category 5 sticker and vehicles without a sticker at all will be banned from the beginning of 2023. The sticker 4 from 2024 and the sticker 3 from 2025. This means that then only diesel cars with Euro 5 or 6, and diesel trucks and buses with Euro 6 standard will be allowed to enter.
In Belgium and the Netherlands
In the Netherlands there is both a premium on purchase and tax relief for e-cars. Similar to Germany, there are also subsidies for companies to convert their company fleet to alternative drives. In addition, a lot of money is invested in research and development of the technology, but also in demonstration projects to convince consumers of e-mobility. In Belgium, as mentioned above, there is no general purchase premium. In the years 2016 to 2020, pure electric models were supported with a premium, but this was abolished again. However, individual regions still promote e-cars for private individuals. In the city of Ghent, up to 4,500 euros have been available since this year. Furthermore, there are various tax breaks in Belgium. In the Flanders region, where the environmental zones of Antwerp and Ghent are located, an e-car is completely exempt from road use tax and vehicle tax. In the Walloon Region, including the city of Brussels with its environmental zone, an e-car only pays the respective minimum rate of tax on road use and vehicle tax. The purchase price and the electricity of an e-car are also 100% tax deductible in Belgium.
On the right track
The countries shown here mostly rely on a combination of subsidies through premiums, as well as tax relief and other benefits. Not mentioned here are the advantages that e-cars enjoy in some areas. These include free parking, use of bus lanes and concessions on tolls on motorways and in cities. In countries like Norway, where the share of e-cars has increased enormously, these benefits are decreasing again, as the state is losing too much money as a result.
Overall, it can be seen that electric subsidies are definitely successful. In pioneering countries like Norway, the share of e-cars is now enormously high. The positive effect of a premium can be seen in the example of countries like Poland, which saw a significant increase in e-cars on the market after its introduction. In Belgium and Denmark, where there is no standard premium, e-cars are lagging behind. Tax benefits and other incentives give drivers advantages also after the purchase of the e-car and are therefore of longer duration than the premium. Subsidies for companies also help to convert company fleets. It is clear that the strength of the subsidy lies in its diversity. By offering a wide range of benefits, different people are addressed and convinced to switch to e-mobility.
The increases in new electric cars in countries across the EU prove the policy right. The promotion has been successful. We are well on the way to greener, alternative mobility. Now we can only hope that the trend will continue and that a nationwide network of charging stations in Europe will make e-mobility a success. This also urgently requires a shift in electricity towards more green electricity, so that emissions are not just shifted from the road to the energy plants.