Major Developments in 2023

The number of electric vehicles (EVs) in Germany continued to rise in 2023. More than half a million battery electric vehicles (BEV) were newly registered. As a result, there are now more than 1.4 million battery electric vehicles in the German vehicle fleet. Together with plug-in hybrids (PHEVs), BEVs accounted for almost a third of newly registered electric cars in 2023. The somewhat lower increase in new EV registrations compared to the previous year can be attributed in part to the decrease in EV subsidies. In 2023, the vehicle purchase bonus for PHEVs was discontinued, and the subsidy for BEVs with a list price of below 40,000 EUR was reduced. At the end of 2023, the federal government then unexpectedly cancelled all BEV purchase subsidies due to budget funding bottlenecks. There is a need to provide charging infrastructure to facilitate continued EV uptake.

As of January 2024, in Germany, there are 106,428 charging points, of which 85,998 are normal and 20,430 are fast charging points, at a total of 43,021 publicly accessible charging facilities. This represents an overall increase of almost 32% compared to the number of charging points last year, with the expansion of the fast charging infrastructure being particularly remarkable with an increase of over 54%. In 2023, total CO2 emissions in Germany decreased notably by 10.1% compared to 2022. The transport sector was responsible for 146 million tonnes of CO2 equivalent emissions, a decrease of 1.2% compared to the previous year.

Electric vehicle purchase bonus scheme

In 2016, the Federal Government introduced the “Umweltbonus” (environmental bonus), a purchase bonus for electric vehicles aimed at promoting their market uptake. Half of the environmental bonus is paid by the car manufacturers and half by the government. In February 2020, the government increased the bonuses and extended the program until December 2025. However, the German government unexpectedly revoked the “Umweltbonus” at the end of 2023 due to budget funding bottlenecks.

Nevertheless, many vehicle manufacturers began offering their customers the environmental bonus in the form of a discount of up to 6,750 EUR at the beginning of 2024, in line with the previous regulations on government subsidies. Overall, the purchase bonuses for electric vehicles ran for more than seven years. The cumulative number of applications for BEVs, PHEVs and FCEVs increased by almost 20% to 2,233,702 in 2023. The increase was slightly lower than in 2022, as no more PHEVs were subsidised in 2023. The applications are broken down by vehicle category as follows:

• BEVs: 1,428,243
• PHEVs: 804,916
• FCEVs: 543

The most popular models benefitting from the purchase bonus schemes are the Tesla Model 3 and Model Y, the Volkswagen e-up! and ID.3; the smart EQ fortwo; the Hyundai Kona Elektro and the IONIQ 5; and the MINI Cooper SE (until December 2023).

For the commercial vehicle sector, the German government has initiated the funding program “Klimaschonende Nutzfahrzeuge und Infrastruktur (KsNI)” for the promotion of light and heavy commercial vehicles with alternative, climate-friendly powertrains and associated refuelling and charging infrastructure, which subsidises 80% of the additional investment costs for vehicle and infrastructure. In addition, feasibility studies are subsidised by 50%. The funding program applies to electric commercial vehicles and converted diesel vehicles with battery and fuel cell, as well as plug-in hybrids and hybrid overhead line powertrains. In total, around 1.6 billion EUR was planned to subsidise the purchase of electric commercial vehicles.

However, due to the consolidation of the federal budget at the end of 2023, no new funding under der KsNI will be approved. The approved projects will be honoured based on the 2024 budget and no new applications will be taken going forward.

Credits for electricity used in battery electric vehicles

The “greenhouse gas quota” in Germany is based on the EU’s Renewable Energy Directive and obliges suppliers of petrol and diesel to gradually decrease CO2 emissions. The emissions should be reduced from both the production and use of fuels to increase the renewable energy share of the road sector. Since 2017, fuel suppliers have been able to demonstrate a reduction in CO2 emissions not only by using renewable fuels but also by purchasing CO2 credits from the use of electricity in battery electric vehicles. As a result, private owners of BEVs can commercialise the electricity used by their vehicles on the fuel market as sustainable drive energy. Owners receive financial compensation for selling a predetermined quantity of electricity consumed by their electric vehicle, which is currently set at 2000 kWh. With the introduction of the quota system, emission certificates were in short supply, leading to high prices. During this time, owners of electric cars were able to earn approximately 250 EUR in 2022, with some even earning over 300 EUR in 2023.

Automotive industry

Currently, purely electric vehicle platforms are still predominantly designed with system voltages in the 400V range. However, more platforms with 800V system voltages will debut in the future, mainly due to performance advantages, such as fast charging. The most recent example of this is the Premium Platform Electric (PPE) on which the new Porsche Macan will debut. This comes with a 100kWh battery and can achieve maximum charging power of up to 270kW thanks to the 800V technology.

As a result, the battery can be charged from 10% to 80% in around 21 minutes at a suitable fast-charging station. Porsche’s new Macan, which is being launched exclusively as an all-electric model, underlines the company’s commitment to the continuous electrification of its model range. By 2030, more than 80% of the vehicles delivered should be electrified (including PHEVs and BEVs). This serves as an important step towards the company’s goal of becoming net carbon neutral across the entire value chain by 2030. To achieve this, series production suppliers are already required to manufacture future vehicle components with the use of renewable energy, and since 2021, all German production facilities of the sports car manufacturer have operated on a net carbon-neutral basis.

On the other hand, the VW Group as a whole and BMW are only planning to become climate-neutral across all stages of the value chain, including the supply chain and life cycle, in line with the European target set for 2050. Mercedes-Benz, in contrast, has defined the goal of achieving CO2 neutrality as early as 2039 with its ambition 2039. Initially, during the early stages of vehicle electrification, manufacturers predominantly relied on tier 1 suppliers to produce essential components like electric motors and batteries. However, there is now a shift towards internalising the production of these core components within the automotive industry. Since 2014, only BMW and VW have been producing their own traction motors. Moving forward, PSA, in collaboration with the joint venture “Nidec PSA emotors,” as well as Mercedes-Benz, will manufacture the entire drive system for their new pure BEV architectures in-house. Alongside the trend of increased vertical integration, there is a noticeable shift from hierarchical supply relationships towards “local-for-local” global value creation networks across three key world regions: the EU, the USA, and China.

Outlook

Germany continues to work towards electric vehicle transition through a variety of incentives and policies.