Brief Description

According to official data from Germany, new car sales are expected to increase in 2023. However, due to the termination of government subsidies, electric vehicles have lost their advantage compared to fossil fuel models.

The German Federal Motor Transport Authority (KBA) reported that there were 2.8 million newly registered vehicles in Germany last year, representing a growth of 7.3% compared to 2022. Among various engine types, gasoline car sales in Germany saw a particularly significant growth rate with a year-on-year increase of 13.3%, reaching 979,000 units. This strong growth indicates that gasoline and diesel cars have gained market share after experiencing relative decline for many years.

In contrast, pure electric car sales in Germany increased by only 11.4%, reaching 524,000 units while plug-in hybrid car sales decreased by more than half to only 176,000 units.

Additional Information

Previously, German car buyers rushed to purchase plug-in hybrid vehicles by the end of 2022 in order to benefit from government subsidies before they were gradually phased out.

Following the termination of incentives for plug-in hybrid cars, the German government ended its subsidy program for electric vehicles in early September 2023 and abruptly terminated consumer subsidies in mid-December 2023. The discontinuation of the subsidy program further weakened the vitality of Germany’s electric vehicle market, resulting in a decline in sales of pure electric models over the past few months.

Analyst Constantin Gall from Ernst & Young stated that “the lack of national support” will lead to a decrease in new electric vehicle registrations this year in Germany, primarily because “the electric vehicle market has not yet gained firm footing and still relies on government subsidies for development.”

He further added that “Germany’s crucial automotive industry has experienced turbulence due to production stoppages and supply chain challenges related to the COVID-19 pandemic in recent years but has achieved a slight recovery as companies work through backlogged orders.” However, car sales remain below pre-pandemic levels, and with manufacturing costs rising due to high inflation weakening household purchasing power, demand is cooling off, casting a shadow over the prospects of the automotive industry.

Gall pointed out that weak economic growth suggests that 2024 could be another “lost year” for Germany’s automobile sector.

BMW munich plant

The latest news from BMW Group states that starting in 2026, the BMW Neue Klasse Sedan will be manufactured at the company’s Munich plant in Germany. By 2027, the Munich plant will exclusively produce pure electric vehicle models, making it the first factory within BMW Group’s global production network to successfully complete its electrification transformation by late 2027.

As a globally renowned German automotive brand, BMW has also begun to cater to the global trend of vehicle electrification. Will this infusion bring new vitality to the electric vehicle market and propel the growth of EVs in Germany? Only time will tell.