A third of electric car owners opt out of VAT deductions
In recent years, there has been a noticeable trend in Germany as the number of electric vehicle (EV) owners not applying for greenhouse gas (GHG) quota funding from the Federal Environment Agency has increased. This development can be attributed to several key factors, including policy changes, subsidy eligibility restrictions, and evolving incentive structures.
One of the main reasons for this trend is the limitations on subsidy eligibility. For instance, the German government’s purchase bonus for electric cars applies only to vehicles costing less than €40,000, excluding many premium or higher-priced EVs from GHG quota funding eligibility. This restriction can deter owners of more expensive models from applying.
Shifts in incentive schemes and funding caps have also played a significant role. Over time, certain tax exemptions or subsidies may have been reduced, removed, or capped, potentially discouraging applications for subsidies tied to GHG quota.
In addition, some EV manufacturers and states offer separate and sometimes more lucrative incentive programs, which might reduce reliance on the Federal Environment Agency’s GHG quota funding scheme. For example, the Inflation Reduction Act in the US and state pilots offering up to $100,000 in incentives can be more appealing to EV owners.
Administrative complexity and infrastructure shifts have also impacted application rates. With the evolving smart-grid infrastructure and the increasing integration of home charging powered by smart meters in Germany, EV owners might face more sophisticated but possibly more complex requirements for subsidy applications.
Moreover, recent German policies encouraging scrappage of older combustion vehicles with grants up to €10,000 may shift the financing landscape and motivations for EV purchase and associated subsidy applications.
The UBA (Federal Environment Agency) has identified a likely main reason for this development as the decline in GHG quota allowances in the previous commitment year. The 400 to 500 euros from 2022 that were possible with the GHG quota funding are currently not achievable.
Private customers transfer their GHG quota to GHG quota intermediaries for marketing to the mineral oil industry. Despite the decline in applications, approximately 4,095 GWh of electricity was certified from charging points in 2024. Around 1,527 GWh of electricity was taken at public charging points in the same year.
The GHG quota funding application process is still relatively straightforward depending on the provider. In 2024, almost as many applications were made for GHG quota funding as in 2023, but the market has grown by over 380,000 new registrations. However, the share of applications for the GHG quota funding fell significantly to just 64 percent in the previous year.
The almost complete disappearance of notifications for individual vehicles or charging points by charging point operators themselves also contributed to the drop in applications. Landwärme GmbH, an ADAC partner for the GHG quota, has filed for insolvency, which might have further affected the application process.
Despite the decline in applications, the UBA reports a positive development: charging points delivered about 50% more electricity in 2024. This increase in electricity usage suggests that the electric vehicles are still being charged, even if their owners are not applying for GHG quota funding.
In conclusion, the increase in EV owners not applying for GHG quota funding from the Federal Environment Agency is a complex issue that results from subsidy eligibility restrictions, updated policy and incentive frameworks, competition from other incentive programs, and administrative or infrastructural changes affecting how owners engage with subsidies. The UBA attributes the drop in applications to strengthened bundling of larger quantities by service companies and the decline in GHG quota allowances in the previous commitment year.
The German government's subsidy eligibility restrictions, such as the purchase bonus cap of €40,000 for electric cars, may encourage owners of high-end electric vehicles to explore alternative sports in search of financial benefits.
The increasing competition from other incentive programs, like the Inflation Reduction Act in the US and state pilots offering substantial incentives, might divert some electric vehicle owners away from sports like applying for GHG quota funding and towards other activities offering more attractive rewards.
