German government to tighten e-car subsidy rules to curb lucrative resales abroad

Germany’s economic and climate ministry is looking to take action against the export of electric cars subsidised with up to 9,000 euros shortly after the required holding period of six months.  "It is not the purpose of the funding that subsidised cars are regularly resold to other European countries after the minimum holding period has expired and that this becomes a business model for dealers and buyers," the Federal Ministry of Economics told financial weekly WirtschaftsWoche. "The Federal Ministry of Economics has recognized this problem." The ministry is currently working on adjusting the funding system, with new rules set to apply from 2023. Changes are likely to include an extension in the minimum holding period from 6 to 12 months. In addition, owners who want to sell their subsidised e-car after less than a year would have to pay back the subsidy, the magazine notes, citing ministry sources.

The depreciation of a used e-car after 12 months is significantly higher than after six months, making a resale abroad less attractive. The export of subsidised cars has taken on large proportions in the past year. “Around 30,000 e-cars are likely to have been sold abroad as nearly new used cars in the first nine months of last year alone," said Stefan Bratzel, director of the Center of Automotive Management (CAM). A study by the Center says German subsidies are promoting electromobility abroad and estimates that "in 2021 alone, up to 240 million euros in state subsidies for purely electric vehicles may not have been used as intended.”

The government last year extended e-car subsidies until 2025. E-car manufacturers have welcomed the support, which began in 2016, saying it has given e-mobility a major boost in Germany. Critics, however, have called for an end to subsidies because of the abuse, arguing that they are also boosting the profits of car dealers that sell used vehicles abroad after their buyers receive purchase premiums.