German Government Gears Up to Boost EV Sales. Will it Help Tesla?

Nearly every major country in Europe including Britain, Germany, France, Netherlands and Norway have announced their intent to ban fossil fuel powered vehicles.

Wikipedia

“Under its National Plattform for Electric Mobility, Chancellor Angela Merkel set the goal in 2010 to deploy one million electric vehicles on German roads by 2020.” But that goal looks so out of reach for the world’s fourth largest auto market as EV’s accounted for just 1.58% of sales last year.

Though EV sales steadily increased over the last five years, Germany is still lagging when compared to other European countries like Norway. Even to get closer to its own target of  million electric vehicles by 2020, Germany will have to aggressively promote EV sales. German government is now planning to drop the tax rate on privately used company cars from 1% to 0.5%.

“The private use of a company car is treated as taxable income in Germany and measured at a flat monthly rate of 1% of the vehicle’s gross list price. So plug-in electric cars have been at a disadvantage since their price tag can be as much as double that of a car using a conventional internal combustion engine due to the high cost of the battery.” – Wiki

The 50% reduction in tax rate will apply to electric and hybrid vehicles purchased or leased from 1 January 2019 to 31 December 2021. If EV costs come down, it will certainly help accelerate EV sales in Germany.

Germany based news website Manager-magazin.de wrote, “For e-cars as a company car, the previous rule (1% tax) is considered financially unattractive because of higher initial cost. Union and SPD had agreed in their coalition agreement a reduced rate for company car taxation.”

Will it Help Tesla?

The German government excluded premium cars with a purchase price of over €60,000 (US$67,800) from its Electric Vehicle Subsidy Program, thus eliminating Tesla Model S from availing the discount .  So far,its not very clear if the current tax reduction will apply to all cars or if there will be a qualifying price range.

Tesla sold just 3,331 cars in 2017 and followed up its lukewarm sales story in Germany by selling 1,253 cars in the first six months of 2018.

If the German government decides to keep luxury cars out of its tax cut, it will further dent Model S/X sales growth in the country. But thankfully, Tesla will soon have its Model 3, which starts at a lower price point and be eligible for the €4000 EV subsidy as well as the Tax cut.


Source:

http://www.manager-magazin.de/unternehmen/autoindustrie/bund-plant-steuergeschenk-fuer-elektro-dienstwagen-a-1220536.html