The Future of EV Sales: Responding to Germany’s 2024 Funding Changes

Welcome to a current overview of the latest developments in the funding landscape for eMobility in Germany. Understanding the world of government subsidies and benefits can sometimes be confusing, but we're here to shed some light on the subject. Despite the end to the well-known environmental bonus, this does not mean that consumers are left in the lurch. But how does this affect dealers and what’s the best way of dealing with these developments? In this article, you will learn all about the upcoming funding opportunities available from 2024 and how the market is affected. So stay informed and ready to take advantage of the latest funding initiatives.

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1. Is it the End or an Update of the Environmental Bonus?

It is true, the environmental bonus for electric vehicles in Germany is being discontinued once and for all. This significant change in environmental policy and approach to e-mobility in Germany has many reasons. Let's take a closer look at them:
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• Budgetary Constraints: Since 2016, over 10 billion euros have been disbursed, and limited public funds have made it financially challenging to continue the environmental bonus.
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• Market Development: With rising sales figures and increasing momentum in the e-vehicle market, it is assumed that this sector now requires less state support.
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• Political Priorities: Changes in political priorities, such as a heightened focus on other areas of environmental protection, may have also played a role.
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The abrupt termination of the environmental bonus on December 17, 2023, sparked considerable criticism, especially due to the lack of notice and the resulting uncertainties for consumers and the automotive industry.

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2. What Do Incentives in 2024 Look Like? Here's an Overview:

Currently, there are no new funding programs for electric vehicles, like said “Umweltbonus”. However, there are other benefits, Germans can apply for:
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• Wallbox Incentive Continuation: The German government’s commitment to EVs persists with the Plug-in Incentive, set to continue throughout 2024. This ongoing support is instrumental in sustaining the demand for new EVs.
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• Investment in Charging Infrastructure: The government is also investing in expanding and improving EV charging infrastructure. This development will enhance the practicality and appeal of owning EVs, thereby influencing both the new and used EV markets.
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• Impact on Used EV Prices: These initiatives are expected to maintain a robust demand for new EVs, indirectly exerting downward pressure on the prices of used EVs.

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3. What do EV Dealers need to Address Now?

The end of the “Umweltbonus” subsidy are affecting consumer decisions and also bringing both new challenges and opportunities for car dealerships. We would like to introduce you to an analysis of how the recent developments in Germany's eMobility subsidies are reshaping the market dynamics.
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1. Revise Sales and Inventory Approach: Dealers may consider focusing their sales on the overall benefits of EVs. To cater to a broad range of customers, they should also stock vehicles priced at or lower to meet the reduced budget.
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2. Customer Education: Educate potential buyers about how they can still benefit from purchasing an EV. This includes providing information on the overall cost savings, environmental benefits, and the long-term value of owning an EV.
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3. Adjust Financial Counseling: Offer guidance on financing options. This may involve working closely with financial institutions to develop attractive buyer financing packages.
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4. Prepare for Long-Term Ownership: As the minimum holding period for subsidies increases, dealers should emphasize the durability and lower maintenance costs of EVs to appeal to buyers looking for long-term vehicle ownership.
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5. Your Own Bonus: Some dealers and car manufacturers have decided to provide their own 'environmental bonus.' This loss is smaller for the companies than the possible decrease in sales.

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4. Rise in Second-Hand EV Market: A New Opportunity for Dealers

In light of the recent changes in Germany's eMobility funding and the broader European market, there is an emerging trend that EV dealers should be aware of: the increasing availability and demand for second-hand electric vehicles. This trend is driven by several factors that are reshaping the EV market:
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1. Market Dynamics Shift: With a high supply of second-hand EVs, the market dynamics are expected to shift. Dealers will likely face increased competition in the used EV sector, which could lead to more stable and competitive pricing for these vehicles. This presents both a challenge and an opportunity for dealerships to expand into the pre-owned market.
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2. Balancing Supply and Demand: The key to success in this evolving market will be balancing the increased demand for electric vehicles with the growing supply of used models. This balance is crucial in maintaining stable prices in the used EV market, benefiting both consumers and dealers. Dealerships can leverage this trend by offering a diverse range of both new and high-quality used EVs, catering to a broader customer base.
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3. Strategic Positioning: Dealers should strategically position themselves in this changing market. This includes focusing on after-sales services and warranties for used EVs, which can help build customer trust and loyalty. Additionally, educating consumers about the benefits of owning a used EV, such as cost savings and environmental impact, will be important.

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Conclusion

In summary, EV dealers are at an important turning point. With the end of EV subsidies in Germany, the market is set for significant changes. Dealers must adapt quickly, focusing on used EVs, staying informed about consumer trends, educating customers, enhancing marketing strategies, and collaborating to improve charging infrastructure. Embracing these strategies will not only help navigate the changing landscape but also position dealers for sustained success in the evolving EV market.

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FAQs

What impact does the end of EV subsidies in Germany have on the EV market?

‍The end of the subsidies in Germany is likely to influence the EV market by shifting consumer preferences towards used EVs and necessitating adjustments in dealer strategies.

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How should EV dealers respond to these market changes?

‍Dealers should focus on the used EV market, stay updated on trends, educate customers about EV benefits, offer flexible financing, and contribute to enhancing charging infrastructure.

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Why is the used EV market becoming more important?

‍With subsidies ending, consumers are looking for cost-effective alternatives, making used EVs an attractive option due to their lower upfront costs and long-term savings.

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How can dealers educate their customers about EVs?

‍Dealers can inform customers about the total cost of ownership, environmental benefits, savings on fuel and maintenance, and the expanding charging infrastructure.

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What role does charging infrastructure play in the EV market?

‍A robust charging infrastructure is crucial for EV adoption, as it increases convenience and reduces range anxiety, making EVs more appealing to a broader range of consumers.

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