Study: Switching to electric cars puts low-income households under greater strain
Image: Skoda (illustrative)
A study by the Öko-Institut commissioned by the Climate Neutrality Foundation aims to show how emissions and investments in passenger car traffic will be distributed among different household groups in the future.
Currently, households that use company vehicles generate the highest emissions. However, they are also the fastest to electrify their vehicles. According to the study, starting from the mid-2030s, the remaining emissions will be distributed much more heavily among households with low incomes and high vehicle mileage. At the same time, households with low incomes bear the highest relative investment burden at all considered time points.
An additional survey by the Climate Neutrality Foundation reveals where the obstacles lie: According to it, private charging access is a key prerequisite for willingness to purchase. High acquisition costs and few affordable models hinder the shift among low-income households. Therefore, the Climate Neutrality Foundation recommends continuing purchase incentives for low-income households beyond 2028 and specifically improving charging facilities in rental housing areas.
Thomas Losse-Müller, director of the Climate Neutrality Foundation: “The shift to alternative fuels is progressing. But households achieve this at different times. Those who cause the highest emissions today by using company cars will, in two out of three cases, be driving electric vehicles by 2030. Starting from the mid-2030s, costs will rise for households with low incomes who still need to drive a lot. They lack the money to switch to electric cars and often lack parking spaces for charging. Those who cannot make the switch will pay more each year for gasoline and diesel.”
The study applies the “climate-neutral Germany” scenario developed by the Agora think tank to the household data from the “Mobility in Germany” survey. Households are divided into eight groups based on net income, annual car mileage, and access to public transportation. Households with company cars form a ninth group. Investments are determined from the annual depreciation of new and used cars and allocated across these groups. The Klimaneutralität Foundation adds to the modeling by conducting surveys with 3,000 potential electric vehicle buyers.
Emission profile shifts by the mid-2030s
The analysis shows that households with company cars drive a lot and tend to use highly motorized vehicles. These vehicles are replaced particularly quickly. By 2030, 50 percent of their passenger cars will already be battery electric in this scenario. Households with high incomes and high mileage follow with just over 30 percent. The lowest proportion is found among households with low incomes and low mileage, as they keep their vehicles for especially long periods and own them less frequently.
By 2035, the picture regarding GHG emissions from transportation within society will change significantly: households with low incomes and high car usage will then account for the highest emissions per household. They make up 9.3 percent of all households. By 2035, their share of electric cars will be between 40 and 45 percent, while it is 76 percent for business vehicles. Rising costs of fossil fuels will hit these households the hardest, as they are the last to switch over.
Lower-income households bear a higher investment burden
In absolute terms, higher-income households invest more in cars. They own more, newer, and larger vehicles. However, measured by available net income, households with less than 2000 euros per month will bear the highest financial burden in the years 2030, 2035, and 2045. The burden is lowest for households with more than 6000 euros. For wealthier households, the financial burden decreases significantly over time as they transition to electric vehicles more quickly, reducing operating costs.
"New electric cars will first reach areas where vehicles are replaced early: in corporate fleets and among households with high incomes and high mileage," explains Peter Kasten, head of Resources & Mobility at the Öko-Institut. "Households with low incomes drive older cars, often live in rentals, and therefore adopt electric vehicles later. Tools such as social leasing or other income-based purchase incentives that make the transition easier for low-income households with high mileage are therefore of great importance."
Charging access and purchase costs determine willingness to buy
The survey conducted by the Foundation for Climate Neutrality confirms the findings from the perspective of buyers. Practical living conditions have a much stronger impact on willingness to purchase an electric car than personal preferences. Without home charging options, 14 percent of respondents want to buy an electric car, while this figure rises to 51 percent with charging facilities available.
70 percent of respondents currently cannot charge at home or at work. 29 percent are permanently dependent on public charging stations because it is not possible to install a charging point in their living environment. For them, affordable public charging infrastructure is crucial. The respondents were divided into different segments. Those sensitive to price and the undecided cite purchase costs as a major barrier. Therefore, an increasing supply of affordable used cars is essential for them.
Policy Recommendations from the Climate Neutrality Foundation
The Climate Neutrality Foundation derives four recommendations from the findings:
First, it was correct to introduce income-based subsidies for electric cars in 2026. However, these subsidies should expire by the end of 2028 at the latest. Low-income households would still need support after that, and it should continue with stricter income thresholds.
Second, charging must become affordable and transparent for people without their own parking space. To achieve this, the foundation proposes attractive ad-hoc prices at all charging stations, publicly disclosed roaming fees, and a market transparency office under the Federal Network Agency. Meanwhile, the expansion of private and public charging points in rental housing areas must progress more quickly.
Thirdly, the tax advantage for internal combustion engine vehicles should be reduced, most simply by taxing them at 1.5 percent of the list price before taxes. The vehicle tax should be more closely tied to CO₂ emissions.
Fourthly, the distance allowance should be converted into a mobility allowance that is independent of income. This would provide more targeted relief to low-income commuters than the current tax deduction.
Losse-Müller: “The purchase incentive is tiered according to income, which was an important step. But it ends before households make the switch we’re aiming for by mid-2030s. For them, we need a follow-up solution that works without upfront financing. Charging is equally important. Those who can charge at home save money. That’s why these households are more inclined to buy an electric car. Those without a parking space need public charging stations with fair and transparent prices. Without access to charging, the purchase subsidy doesn’t reach many households.”
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About the author
Thomas Langenbucher is an expert in electromobility with professional experience in the automotive and financial industries. Since 2011, he has been covering electric cars, sustainable technologies, and mobility solutions on ecomento.de. Learn more.
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