Economic recovery plan Germany

Munich, 17 June 2020

The corona virus has changed our daily lives. In order to cushion the effects of this crisis, the German government has launched a 130-billion-euro economic stimulus package to boost consumption and the economy and to advance topics of the future. The many individual measures are intended to benefit large companies as well as private individuals. It is encouraging to see that the topics innovation, climate protection, sustainability and social justice run like a red thread through the 57 points of the paper. The economic stimulus package also contains several measures to explicitly promote electromobility and charging infrastructure for electric cars

“Innovation premium” for electric cars 

The amended directive on the promotion of sales of electric vehicles was published in the Bundesanzeiger on 7 July and therefore comes into force starting 8 July. The subsidy for the purchase of an electric car, the so-called environmental bonus, will increase from 6000 to 9000 euros until the end of December 2021. However, the bonus, which is listed in the economic stimulus package as an "innovation premium", is only available for electric cars that cost less than 40,000 euros net. Buyers of smaller electric cars in particular benefit from the higher environmental bonus. In the segment of small cars, internal combustion models sometimes cost only a good half of a comparable electric car. Now the prices are converging, for some e-cars such as the Smart ED or the VW e-Up they are dropping to a good 12,000 euros. Popular electric cars in the 30,000 euro price range, such as Opel Corsa-e, Peugeot e-208, Renault Zoe or the VW ID.3, are available for as little as 20,000 euros thanks to the innovation premium – and are thus on the same level as combustion engines with similar equipment and performance.

Drive Net list price Net environmental bonus until 12/2021 Net environmental bonus from 01/2022
Battery / fuel cell Up to 40,000 euro  9000 euro 6000 euro
Battery / fuel cell 40,000 - 65,000 euro 7500 euro 5000 euro
Plug-in-hybrid Up to 40,000 euro 6750 euro 4500 euro
Plug-in-hybrid 40,000 - 65,000 euro 5625 euro 3750 euro

The bonus is increased by the reduction of the value added tax from 19 to 16 percent to up to 9480 euros, as the 3000 euros manufacturer's share of the environmental bonus is deducted from the net purchase price of the car. The subsidy is valid retroactively for all vehicles registered from 4 June 2020 until 31 December 2021. This results in an Opel e-Corsa, for example, costing only 184 euros per month at carwow – putting the car on the same level as its fossil-fueled brother. Taking the operating costs into account, an electric car is worthwhile from kilometer one. 

Change in the taxation of company cars 

A further incentive for switching to a purely electric model is the increase in the upper limit for the reduced tax rate of 0.25 percent for company car taxation. It is now 60,000 euros (gross list price) for electric cars, which is 20,000 euros higher than in the past. This means that the mid-range models currently available on the market can be equipped much better (e.g. with a larger battery) and save more than 1000 euros per year, since the taxation of private use of the company car is based on the purchase price. For PHEVs, the tax rate of 0.5 percent does not change. It is important that the PHEVs have a minimum electric range of 40 kilometers or emit a maximum of 50 g CO2/km (WLTP). For combustions engine vehicles the tax rate is one percent of the gross list price. 

Tax exemption for electric cars extended – Higher vehicle tax for thirsty combustion engines 

The changes in vehicle tax are also in favor of electric cars and fuel-efficient vehicles. While the ten-year exemption from motor vehicle tax for electric vehicles will be extended until the end of 2030, the annual levy for particularly thirsty combustion engine vehicles will increase significantly. This is because registrations from January 1, 2021 onwards will be subject to a gradual increase in the tax rate, staggered according to the vehicle's CO2 emissions. In the future, a diesel with a capacity of three liters and CO2 emissions of 221 g/km will cost 649 euros instead of the previous 537 euros. 

Further e-mobility measures are planned for social services, tradespeople and SMEs: The federal government is setting up a fleet exchange programme to make the switch to electric cars and up to 7.5 ton e-commercial vehicles more attractive. 

Billions for the charging infrastructure 

A good 2.5 billion euros are planned for the mentioned programs for electric vehicles alone. A further 500 million is to be invested in the expansion of the private charging infrastructure. "We welcome the German government's plan to promote not only public but also charging infrastructure at work and at home," says Marcus Fendt, Managing Director of The Mobility House. "In our opinion, this is where the need for action is the greates, since electric cars are primarily charged at home or during work". 

Bonus program for innovations at manufacturers and suppliers 

With 1.2 billion euros, the federal government wants to encourage private and municipal operators to switch to low-emission buses and trucks. The funding of charging infrastructure for electric buses will also be increased. However, this is limited until the end of 2021, so there is an immediate need to take action by bus operators and transport companies. 

"The stimulus package is bold, decisive and sustainable. It is a very clear commitment to battery-powered vehicles and further consolidates the importance of electromobility as the technology of the future," Fendt concludes. "One thing is clear: electric mobility is on the rise. The next logical step must be the networking and intelligent integration of electromobility into the grid, something we at The Mobility House are already actively implementing for our customers.”