Like some other manufacturers, Kia also makes a precision landing with the Niro EV: It costs 47,590 euros. That is exactly ten euros less than the 47,600 euros, which corresponds to a net price of 40,000 euros. So Kia’s pricing is no accident; up to this amount, the state pays over that Federal Office of Economics and Export Control (BAFA) the maximum amount of the so-called environmental bonus: from January 2023, there will still be 4,500 euros when buying a battery-electric car. In addition, the manufacturer’s share is added to the amount of half of it – i.e. 2250 euros – plus the share of VAT on this share (427.50 euros), which together results in 7177.50 euros instead of the previous 9570 euros.
As of New Year’s Day 2023, the environmental bonus is reduced to a maximum gross amount of EUR 7177.50. This number results from a state payment of 4500 euros plus the manufacturer’s share of 2250 euros net, to which in turn the VAT must be added. Only electric cars with a net price of up to 40,000 euros (or 47,600 euros gross) receive the maximum subsidy – for example the Hyundai Ioniq 6 with a 53 kWh battery. It is in the price list from 43,900 euros.
With a net price of 40,000 to 65,000 euros, the state adds 3,000 euros. Here, too, the manufacturers have to make a net contribution of 1,500 euros, which, including VAT, results in a total discount of 4,785 euros on the gross list price. Only when the net list price is more than 65,000 euros does the taxpayer no longer participate. The cut-off date for the reduction is January 1, 2023. Important: the date of the first registration applies. Anyone who has registered an electric car or a plug-in hybrid for the first time by the end of December 2022 can still apply for the previously valid purchase bonus in 2023.
From September only for private buyers
However, and this is likely to unsettle the new car market, the so-called environmental bonus will be canceled for commercial buyers from September 1, 2023. Around two thirds of all new registrations in this country are accounted for by companies and the self-employed. If you consider that, for example, a VW ID.3 that is ordered today will, according to the manufacturer, be delivered in the fourth quarter of 2023 at the earliest, it is obvious that there will be a kind of subsidy panic: Which electric cars can still be delivered in time before September 1st? ?
Private buyers should be aware of this. So they compete for those electric cars that can be with the customer before the deadline. But private buyers could also feel under time pressure because the environmental bonus will be reduced again on January 1, 2024: From then on, battery-electric cars will be eligible up to a net list price of 45,000 euros, there is nothing more. The amount of the direct payment is only 3000 euros, which, plus the manufacturer’s share and no VAT on this part of the premium, results in a total of 4785 euros.
Limited subsidy
There is also a medium-term question mark from the statement by the Federal Ministry of Economics and Climate Protection (BMWK), according to which the environmental bonus will expire as soon as the 3.4 billion euros provided for 2023 and 2024 have been distributed in the Climate and Transformation Fund (KTF). Interested parties should therefore keep an eye on the news situation. From January 1, 2023, there will no longer be a cent environmental bonus for plug-in hybrids registered for the first time. However, demand for battery electric and plug-in hybrid cars remains high and delivery times are long. Every car that can be built with a charging connector will also be sold – typical signs of over-promotion.
Theoretically, buyers of a VW ID.3 also get the maximum environmental bonus. However, the revised version will not be delivered until the fourth quarter, i.e. after September 1st: From this date, only private customers will receive the environmental bonus. Commercial buyers, who make up two-thirds on average, no longer receive a purchase subsidy.
Reduced company car tax
By far the most important funding measure for the sale of battery-electric and plug-in hybrid cars will remain in place anyway: the assessment basis for taxing the private use of company cars with charging plugs remains low. Anyone who also uses a commercially registered car privately must pay tax on it as a benefit in kind. Many taxpayers opt for flat-rate taxation. In the case of conventional cars, taxes have to be paid for one percent of the gross list price per month, and money has to be paid to the tax authorities for the journey to work. How high the net loss actually is depends on the individual tax burden. Electric car owners benefit from additional monetary incentives. Unlike plug-in hybrids, no vehicle taxes are due until December 31, 2030.
For electric cars from 60,000 euros gross list price and for all plug-in hybrids regardless of the price, the assessment basis is halved (0.5 percent rule). For battery-electric cars under 60,000 euros, only a quarter has to be taxed. The pull effect of this tax advantage is massive and leads to a market distortion in favor of all cars with charging plugs. If you are looking for another reason for the crash of cars with diesel engines in the registration numbers, apart from the fraud around emissions values, you will find them in this tax preference for models with charging plugs.
Revenue from GHG quota trading falls
In addition, owners of electric cars can get money by trading in GHG quotas (GHG for greenhouse gases). To do this, they must contact a third party. In 2023, however, the yield will be slightly lower than in 2022: while it was around 350 euros in the old year, it will be around 280 euros in the new year. The reason is the mechanism underlying GHG quota trading.
Based on the actual CO₂ emissions of the electricity mix, the Federal Environment Agency calculates the balance sheet GHG minus due to an electric car. However, the CO₂ emissions per kilowatt hour of electricity will increase in 2023. Depending on the political interpretation, this happens because the expansion of renewable energies is taking place too slowly and nuclear power plants are being shut down too quickly. The war in Ukraine, which is leading to a shift from gas to coal as an energy source, amplifies this effect.
Promote what becomes a duty?
The state is in a difficult situation when it comes to subsidies for electric cars: On the one hand, there is the definitive decision by the European Union to only allow new cars that do not cause direct CO₂ emissions from January 1, 2035 – i.e. in twelve years’ time. Consequently, what is legally enforced is now promoted.
The market is currently overheated by the subsidies. But if the measures are canceled too quickly and too radically, there could be a buying strike. This balancing act remains a tightrope walk. The only thing that is certain is that the automotive industry has a high financial interest in complying with the CO₂ fleet limits. Because the penalties are severe and apply to every car sold by the manufacturer, regardless of whether it has fallen below the CO₂ limit or not.
The coming years will not be easy for the auto industry, because even if all state aid is reduced to zero, it will have to sell more and more electric cars proportionately. How big the challenge is can be seen from the figures for the past year. Despite the massive tax steering effect, only around 15 percent of all new 2022 cars in Germany did not have a combustion engine installed. In 2023, subsidies for electric cars will be significantly reduced – with uncertain consequences.
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