Electric Vehicle Purchase Subsidies Drive Boom, Decline Looms After Subsidies End
Image: Mercedes‑Benz
The German passenger car market is currently showing growth that mobility expert Constantin Gall of consulting firm EY describes as “pseudo-growth.” He explained in an interview with Automobilwoche that this growth is primarily driven by government purchase incentives. The electric vehicle purchase subsidy is currently boosting the new car market and causing a surge in demand for electric vehicles, though this effect depends on the continuation of such incentives. Once they end, a decline in registrations is likely.
Despite growth in the electric vehicle sector, new registrations in July were 19.4 percent below the 2019 level. EY forecasts market growth of around 3 percent for the full year compared to 2025, with sales levels likely to remain about 18 percent below the pre-Corona year.
International manufacturers are greatly benefiting from the electric vehicle boom. According to data from the Association of International Automobile Manufacturers (VDIK), nearly half of all newly registered electric cars in July were from international brands. Sales of BEVs by these manufacturers rose by 93.7 percent to 38,824 vehicles, accounting for a record market share of 49.4 percent in the electric vehicle segment. VDIK President Imelda Labbé sees this as a result of the wide range of affordable electric cars available: “The strong selection of affordable BEVs in the entry-level segment is very popular. International manufacturers now supply one out of every two battery electric vehicles in Germany.”
Chinese suppliers are showing particularly dynamic growth among importers. According to EY, sales from Chinese manufacturers rose by 85.5 percent in July, lifting their market share from 3.9 percent the previous year to 7.1 percent. In contrast, the volume from German manufacturers declined slightly from 61.3 percent to 60.6 percent.
A particularly significant increase was seen among the Chinese manufacturer BYD, whose registrations rose by 365 percent to 5,240 vehicles, giving it a two percent market share. Younger suppliers such as Leapmotor and XPeng also recorded high growth rates.
According to EY, the prospects for the German auto market remain mixed. A weak economy, high energy costs, and geopolitical uncertainties are putting pressure on both households and businesses alike. Additionally, competitive pressure from Chinese manufacturers expanding in Europe is increasing.
Industry expert Gall sees medium-term opportunities for German automakers to regain market share. With new electric entry-level models set to launch by the end of this year and more intensively in 2027, their position in the high-volume entry segment is likely to improve.
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About the author
Thomas Langenbucher is an expert in electromobility with professional experience in the automotive industry and finance sector. Since 2011, he has been covering electric vehicles, sustainable technologies, and mobility solutions for ecomento.de. Learn more.
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