Government incentives push electric car sales to record high in Germany

The shift to electric cars is gaining momentum in Germany, thanks in large part to government-backed incentives that are encouraging buyers to make the switch to electric and hybrid vehicles.

Figures published by Germany’s Federal Motor Transport Authority on Monday show registrations of new all-electric vehicles (BEVs) have risen by 260% in September, from the same month in 2019, to 21,188. These now account for an 8% share of the overall car market.

Hybrids make up just over 20% of the passenger-car market, with registrations up 185% last month from the previous September.

As part of its coronavirus stimulus package, the German government decided not to fund discounts on fossil-fuel cars or back a cash-for-clunkers scheme, but rather to support the switch to clean mobility by doubling subsidies on electric vehicles to between €3,000 (£2,725, $3536) and €6,000 depending on the model. The strategy appears to be having the desired effect.

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Stefan Bratzel from the Centre of Automotive Management said: "The year 2020 marks a turning point for electric mobility, with new registrations in double digits for the first time.”

The Centre of Automotive Management has upped its forecast for the year in light of sales data published on Monday. It now predicts 300,000 new electric and hybrid cars to be registered this year, double its previous expectation.

"The German government's innovation premium, which has increased the price competitiveness of e-vehicles and additionally raised the acceptance of e-mobility, is a major factor in this development,” Bratzel said.

In the medium-term, Bratzel said that density and reliability of the country’s charging infrastructure remains a challenge for electric-car adoption.

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Despite the movement towards cleaner mobility, SUVs are still hugely popular, accounting for a 21% share of the German passenger car market in September.

Overall, new car sales in Germany ticked up by a little over 8% in September from August, with 265,227 new cars registered. But sales are down by 25% over the first nine months of this year as the coronavirus pandemic brought first production, and then sales to a crawl.

Germany’s powerful automotive sector — already weakened by a slump in global demand before COVID-19 hit — is facing big jobs cuts in order to weather both the sales slump, as well as fund carmaker’s expensive switch to electrification. Politicians have warned that the car industry is no longer the driving force of the economy.