Making electric cars affordable in Germany and France

Battery electric vehicles have become the best buying option for our lungs and our climate, but at the moment they are not the best option for every wallet. For those who have a tight budget and rely on cars for their daily mobility, there is even more at stake. If measures are not taken in the short term,Making electric cars affordable in Germany and France to make people transition to battery electric vehicles (Bevs).

In Europe's largest passenger car market, Germany and France, following new sales, the Bev market is developing rapidly, and by 2022 it will reach 18% and 13%, respectively. However, cheaper BEV models are still rare compared to vehicles equipped with an internal combustion engine (ICEV). The new battery–electric Dacia Spring, a small car in the low price segment, still seems unattainable for many - its price almost corresponds to the average per capita annual disposable income of Germany (about 23,000 euros) and France (about 20,000 euros). . Both countries are already making significant efforts to make BEVs more affordable with various taxes and purchase incentives.  But what measures are there to support people who depend on cars and have lower incomes?

In the design of Bev's national income-based guidelines, 3 key aspects are important: how purchase incentives are defined according to income levels, the price cap of the vehicle eligible for purchase incentives, and what type of vehicle will be eligible, such as new or used models. Other types of policies, such as policies that support leasing options such as the social leasing program planned in France, are also groundbreaking and can make BEVs more affordable for low-income people.

Provide income-based incentives for the purchase of new Bevs

If you buy a new BEV in Germany or France, the maximum funding level will be slightly different, as will the funding requirements. In Germany, all private buyers receive the same support regardless of income. The state's 1-time purchase premium is up to 4,500 euros. With 2,250 euros (net) donated by the car manufacturer, each buyer can receive up to 6,750 euros

France, on the other hand, distinguishes between households with low incomes and those with high incomes. Those who earn up to 14,089 euros (annual reference tax income per person) can receive a purchase premium of up to 7,000 euros, plus assistance of up to 5,000 euros. In France, the maximum amount of subsidies is limited to 27% of the total purchase price of the vehicle.

As shown in Figure 1, reducing the purchase price of Dacia Springs by applying only national and manufacturer purchase premiums will result in a similar final price of less than 400 euros.It is about 15,600 euros in Germany and 15,200 euros in France.For low-income people. In the case of France, the maximum bonus of relatively inexpensive BEV models is eliminated

Provide income-based incentives for the purchase of second-hand BEVs

If government policies are aimed at targeting low-income drivers, there may be a better argument for creating incentives to buy second-hand BEVs. For low-income people, these vehicles are often the first choice because they are cheaper compared to new models. Both Germany and France offer incentives to buy used BEVs, but they are not dependent on income

In Germany, the state purchase premium for used BEVs is 3,000 euros, and the manufacturer offers another 1,500 euros. Even if the German bonus seems to be high, it will have to meet different requirements. For example, a new purchase premium may not have been applied to the vehicle, and the BEV is registered only for a maximum of 12 months, with a maximum mileage of 15,000 km. In France, the purchase premium for a used BEV is €1,000. To qualify, the vehicle must be at least two years old from the date of initial registration, purchased from a dealer and owned for at least two years. Use BEV bonus can be granted a maximum of 3 times in 1 year.

Neither Germany nor France have introduced an income-based purchase premium for second-hand Bevs, but outside of Europe, there are such policies in states such as California and Pennsylvania, for example, in the United States.

Introduction of vehicle price caps as an incentive to purchase new and used BEVs

Setting a price cap on Bevs that are eligible for purchase incentives can prevent money from being paid to those who can afford a new, expensive car. In Germany, if the net list price of a new BEV is less than 40,000 euros, a state bonus amount of up to 4,500 euros will be paid, and if the net list price of a new BEV is 40,000-65,000 euros, the bonus will be reduced to 3,000 euros. The maximum price for buying a used BEV is €65,000. In France, only buyers of new BEVs less than 47,000 euros can receive the bonus, and there is no price cap for used BEVs.

Introduction of income-dependent incentives for BEV leases

Leasing options can be a good alternative to limiting the high upfront costs of buying a new or used BEV. In Germany, the bonus amount for leasing a BEV depends on the duration of the lease and the net list price of the vehicle, whether it is a new or used car. In France, the bonus amount for new and used Bevs leases is the same as for purchases.

The amount of income-dependent leases can further support people in low-income groups. France is planning to introduce a new "social BEV leasing program" and has announced that "those who need it most" should be able to lease a BEV for 100 euros a month. However, there are no details regarding the vehicle's eligibility or lease term. For comparison: The new Dacia Spring Essential is available in France from €2,500 per month for long-term rentals (37 months) after the initial payment of €120, taking into account the purchase premium of €5,000. The Peugeot e-208 is available from 36 euros per month for long-term rental (150 months). A similar program is not yet planned in Germany.

Providing additional income-dependent incentives for new and used low-emission vehicles

In addition to the above guidelines, France also offers other income-based policy measures, in addition to low-emission Icevs, to support the purchase of BEVs. This includes income-based conversion bonuses that support replacing older cars with cleaners, zero-emission or low-emission versions, and zero-emission or low-emission vehicles that are new or used by low-income people through long-term rentals or rentals with purchase options. Includes clean vehicle microcredit to purchase.

Introduction of Bonus Mars Automobile tax system

France introduced the Bonus Mars tax system in 2008, ensuring that Mars is paid by those who can buy it best. Buyers of high-emission new cars, who are generally high-income people, pay a high registration tax once at the time of purchase - from 2023 the maximum amount will be euros for cars with emissions of more than 50,000 g of CO2/km (based on WLTP). In the past, this amount was not only used to fund bonus payments for both BEVs and plug-in hybrids, but also partially converted premium Germany has no equivalent bonus-Mars tax system, and the purchase premium is paid indirectly by all taxpayers.

France and Germany are making corresponding efforts to make BEVs more affordable for people with lower incomes through national policy measures. But as the figure above shows, the whole of France is leading in implementing policies for low-income people. In Germany, there may be the threat of a fragmentary transition to BEVs, which makes access to BEVs more difficult for low-income people who rely on cars in their daily lives. If we don't leave them, we can support the urgent technological changes needed to achieve climate targets and reduce air pollution and health risks.