- Germany will introduce a “depreciation allowance” for electric company cars.
- Drivers of expensive zero-emission company cars also benefit from tax deductions.
- The goal is to boost EV sales, following a massive drop in recent months.
Less than a year after Germany abruptly cut EV subsidies, the federal government wants to introduce tax benefits for electric company cars. The move comes after VW bosses threatened to close German plants due to insufficient demand.
The new incentives include a “depreciation allowance” for zero-emission company cars, effective from July 1, 2024, until December 2028. This will allow companies to claim a tax deduction equal to 40 percent of the EV’s value in the year of purchase, with the rate gradually dropping to 6 percent.
More: VW Has “One, Maybe Two Years” To Save Brand, Finance Boss Warns
Furthermore, the price cap for tax benefits on EVs has been increased from €70,000 ($77,697) to €95,000 ($105,446). Although the latter is clearly targeted at the more premium corner of the EV market, German officials hope that these measures will boost EV sales altogether, helping local automakers cope with the challenging market conditions.
Drivers of company cars will also benefit from the new rules, which can significantly reduce their monthly payments. More specifically, their taxable income increases by 0.25 percent of the gross list price of the EV per month. For comparison, the rate is 0.5 percent for hybrids and PHEVs, and 1 percent for ICE-powered vehicles.
As reported by Auto Bild, this translates to monthly payments of €237.5 ($264) instead of €950 ($1,055) for a €95,000 ($105,446) EV like the Kia EV9, BMW i5, Mercedes EQE SUV, or Porsche Macan Electric.
BMW i5
The EV subsidies are estimated to cost a combined €540 million ($600 million). The German government believes that having more electric cars on German roads will increase the acceptance of e-mobility and push EV demand.
More: German Car Sales Plunge In August As EV Slump Worsens
The EV market in Germany has not recovered after the demise of the environmental benefit in December 2023. According to the latest data, EV sales in Germany dropped by a massive 69 percent in August 2024 compared to the same month last year, following a 37 percent drop in July.
In a recent meeting with workers, high-ranked officials from Volkswagen revealed they are considering closing down German plants. The company blames the market conditions for losing sales of around half a million cars, or the equivalent of two factories. The new incentives might help avoid plant closures which would hurt the country’s economy.
H/T to Marko!
