net-zero.vision
Receive every month a list of newly covered startups in our newsletter
Discover NEW cleantech startups every month
Discover NEW cleantech startups every month
With the end of the eco-bonus, the electric car market is expected to decline by 50,000 to 100,000 units in Germany this year. German motorists remain hesitant towards electric cars, which they perceive as too expensive and not very practical.
Peter Tschentscher wanted to keep up with the times. A year ago, the Mayor of Hamburg switched to an electric car. He started commuting between Hamburg City Hall and the Federal Chancellery in Berlin in a Mercedes EQE 500 with 408 horsepower. The vehicle is sold for around 120,000 euros in Germany, according to the catalog price. The end result? His official vehicle is changing. The mayor of Germany's second-largest city is switching to a hybrid motorization, as reported last week by the popular daily newspaper "Bild."
In cold weather, the Mercedes's range wouldn't allow a round trip of 580 kilometers between Hamburg and Berlin, despite an advertised range of 590 kilometers.
This further reinforces the doubts of German motorists about electric cars, which are often seen as too expensive and not practical enough, even as the country's leading industry transitions to battery-powered vehicles.
In Germany, 2023 was both a symbolic and paradoxical year for the electric car market. Symbolic because, for the first time, the Volkswagen brand surpassed Tesla in this segment, with over 70,000 vehicles sold last year, according to the Federal Automobile Agency (KBA), while Elon Musk's company saw its sales decline by 9%, to nearly 64,000 units. It was also symbolic because the offering increased by a third, reaching 105 models, with nearly half of them being SUVs.
But it's paradoxical because the democratization of the market is still in progress. With 524,000 registrations, electric vehicles accounted for 18.4% of the market last year, an increase of 0.7 percentage points.
In 2023, the selection of small electric cars decreased, and the average price of vehicles (excluding options) increased by 8.3% compared to 2022, reaching 52,693 euros (without subsidy deduction), according to calculations by the Center for Automotive Management (CAM), an expert advisory firm that advises the government.
"The high purchase price of electric cars and the lack of affordable models compared to combustion vehicles are obstacles to buying for many customers," says Stefan Bratzel, director of CAM.
Above all, 2024 will mark a turning point in terms of sales. With the end of the eco-bonus, the German electric car market is expected to decline by 50,000 to 100,000 units in 2024, according to CAM's forecast.
In December, manufacturers had to offer discounts to compensate for the disappearance of the eco-bonus and reassure customers. Tesla launched a new price offensive in January, with price reductions of 5,000 and 1,900 euros on Model Y.
All of this while the German giants are operating with significantly higher cost bases than Tesla and Chinese manufacturers.
What is the current weight of electric cars among German automakers? The share of battery-powered cars in sales varies significantly from one player to another. In 2023, it represented 8.3% of global sales for the Volkswagen Group, 15% for BMW, and 11% for Mercedes. BMW indicates that it generates most of its growth with electric vehicles. "The tipping point for combustion engines is already here," explained the group's chief financial officer, Walter Mertl, last week.
In the German market, the landscape is a bit different. According to the Center for Automotive Management, the Volkswagen brand achieves 14% of its sales in electric cars, behind BMW (17%) but ahead of Mercedes (13%) and Audi (12%). However, the best-selling model remains the Model Y, with 45,000 units, well ahead of the Volkswagen ID.4 and ID.5 (just over 36,000 vehicles).
In 2021, the government coalition led by Olaf Scholz announced a goal of having 15 million electric vehicles on German roads by 2030. Today, the country has 1.7 million electric cars, according to the Statista platform. In a report published at the end of November following an automotive summit at the Chancellery, a circle of experts estimated that the country was more likely to have 10.5 million electric vehicles by that deadline. And that was before the eco-bonus was removed.
Faced with these uncertainties, industrial strategies have differed for a long time. In contrast to Volkswagen, which assembles its electric cars on dedicated lines, BMW chose to sacrifice optimization and equipped itself with production lines capable of mass-producing electric, hybrid, or combustion vehicles.
While Berlin has secured the continuation of e-fuels in Europe beyond 2035, it may not be easy to convince Germans to abandon combustion engines. In the fall, the Minister-President of Hesse, Boris Rhein, won the regional elections with rather assertive posters. One of them targeted environmentalists with a simple message: "It is forbidden to forbid the car."