Germany considers new tax breaks for EVs as VW threatens plant closures

The German government is readying the implementation of new tax breaks for electric company cars, amid collapsing sales and mooted unprecedented plants closures at VW, reported WirtschaftsWoche.

Economy minister Robert Habeck said the government was “currently preparing tax breaks for electric cars,” adding that the car sector “is a cornerstone of German industry and should remain so,” according to an n-tv report.

 Habeck said the car industry faced an “enormous” transformation and that German manufacturers had to keep up with global competition, and needed long-term planning certainty, particularly when it comes to e-mobility.

If they don’t get it, “the only one who will be happy is China, which will continue to expand its technological development,” said Habeck.

As part of the agreement on the 2025 budget, the government decided to improve tax write-offs for company cars, among other steps by increasing the price threshold for eligible cars to 95,000 euros, thus including many models made by the country’s luxury carmakers.

German car manufacturers and their suppliers employ tens of thousands of workers across the country. But their late decision to significantly ramp up investments in EVs and battery technology is shaking up longstanding industry networks and production practices.

Carmakers like VW, one of Germany’s major players, are struggling against tough competition, particularly in and from China. The company has embarked on radical cost-cutting measures and is now considering shuttering factories as profits tumble.

New registrations of electric cars have been falling for months in Germany, partly due to a sudden end to subsidies which lowered the cost of the vehicles late last year due to budget shortfalls. Registrations of new battery-electric vehicles were down nearly 70 percent in August compared to the same month in 2023, according to the latest official figures.

Clean Energy Wire. Reproduced with permission.