Germany plans to remove subsidies for PHEVs sooner – proposal includes reducing incentives for EV buyers

According to a report by Automotive News Europe, Germany’s economy ministry wants to end subsidies for plug-in hybrid vehicles (PHEVs) earlier than planned at the end of this year and reduce a third of the the cash bonus for electric vehicles (EVs) starting in 2023.

The proposed plan will see the current incentive of 4,500 euros (RM20,652) for PHEVs be eliminated, while the subsidy for EVs would drop from 6,000 euros (RM27,539) now to 4,000 euros (RM18,358) in 2023, before dropping again to 3,000 euros (RM13,768) for 2024 and 2025.

The proposed move is part of the country’s plan to shift subsidies toward climate protection, with the original plan being to halt subsidies completely by the end of 2025. “We want to sharpen the focus of our support for e-cars and focus more on climate protection,” said Robert Habeck, Germany’s minister for economic affairs and climate action and a member of the Greens party. “In our opinion, plug-in hybrids are marketable and no longer need public funding,” he added.

However, the automotive industry has voiced its concern about the accelerated timeline to reduce/remove subisidies, with Hildegard Mueller, who heads the VDA automaking lobby, saying the proposal could “endanger the ramp-up of electric mobility and ignore the realities of consumers in Germany.”

Mueller also noted that subsidies are tied to vehicles’ delivery date, creating uncertainty about how much buyers will need to pay. With supply chain issues plaguing the automotive industry, customers could miss out on incentives if they must wait a long time for their cars to be delivered.

Meanwhile, Bernd Reuther, transport policy spokesperson for the Free Democrat Party, said the ruling coalition should stick to its original subsidy plan. “We have to make a transition to these vehicles as attractive as possible and subsidize them accordingly,” Reuther said.

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