Because the environmental bonus in Germany for the promotion of electric cars expired on December 18, 2023, the auto industry now fears a drop in sales. In Germany, for example, car manufacturers are counteracting the lack of funding with their own discount campaigns. The result: The prices for electric cars are falling. In Austria there are still e-mobility subsidies for private individuals and companies.
Car manufacturers rely on their own discount campaigns
After the government funding in Germany expires, several manufacturers are launching their own discount campaigns for electric vehicles. The reason for this is the margin that they would lose if they remained in the cars. For example, Volkswagen has introduced the “environmental bonus”, which offers customers attractive discounts on their ID electric models until the end of March 2024. Some of the discounts even exceed the previous state funding amounts. The ID.4 and ID.5 series can therefore be purchased at a discount of more than 7,700 euros.
BMW also lacks a corresponding profit margin for electric cars. BMW CFO Walter Mertl states that although they earn money through the sale of electric cars, “there is currently no question of equal margins.” He assumes that this will not change so quickly and that he will continue to earn more from combustion engines in 2026. BMW’s goal is now to significantly reduce production costs through new electric car production from 2025.
Experts see a long-term trend
Experts and dealers classify low prices for electric cars as a long-term trend. They see a price war brewing in Europe and estimate that discounts on electric cars could be permanent – following the example of China. After VW announced the environmental bonus, other manufacturers such as Renault and BYD also reduced their list prices for certain electric models. Dacia, Renault’s Romanian subsidiary, is currently offering the highest single discount. The discounts usually apply in several European countries.
Car expert Stefan Bratzel from the Center of Automotive Management (CAM) expects little growth in Europe this year despite discounts for electric vehicles. In Germany there were 524,000 new registrations of electric cars last year, and in Austria there were 47,621. Bratzel sees 2024 as a transition year for electromobility. According to him, without appropriate discounts, it will be very difficult for major manufacturers to sell electric cars this year.
The pressure is growing: no more combustion engines from 2035
The dilemma for many manufacturers is now: Either the already underutilized factories are threatened with production restrictions and this would mean running out of work, so to speak, or the companies are losing margins. This is a problem, especially for mass manufacturers. The discounts offered are actually intended to increase returns, but on the other hand, “a strategy that focuses solely on volume is not sustainable in the long term,” says VW manager Imelda Labbé to Handelsblatt.
The pressure is growing, especially in Europe, because combustion engines will no longer be allowed to be sold by 2035 at the latest. In addition, there are the EU directives on CO2 fleet limits, which will become stricter from 2025 and require an increase in electric vehicle sales. A trend reversal will only be achieved when the prices of combustion engines and electric cars converge and cheaper models come onto the market. Citroën and Renault have announced small electric cars for 2024 for less than 25,000 euros. VW says it will follow suit in 2026 at the earliest.