E-car bonus: success celebrated, experts warn of market collapse

100,000 drivers have already taken advantage of the e-car bonus. The government is cheering. But car expert Frank Schwope sounds the alarm: As soon as the budget is used up, the next setback for the market will follow.

More than four months after the start of the new e-car bonus, the federal government is hailing the funding program as a complete success. Federal Environment Minister Carsten Schneider told the “Bild” newspaper that it far exceeded expectations. According to government figures, the bonus has now been paid out to 100,000 applicants.

However, car expert Frank Schwope sees the figures as no evidence of sustained success achieved through the bonus. The market breakthrough had already taken place before the introduction of the electric car bonus and was primarily due to the high fuel prices: "People often act very rationally when it comes to their own wallets." The lecturer in automotive management at the Berlin University of Applied Sciences considers the bonus itself to be an enormous waste of taxpayers' money: "It distorts the market and leads to a slump after it expires."

According to Schwope, it is far from certain that the government subsidy will actually reach the customers in the end. "Premiums often lead to retailers and manufacturers offering fewer discounts of their own and keeping prices high." The Environment Minister, on the other hand, emphasized the relief effect of the funding. Every additional electric car protects households from high fuel prices and makes Germany more independent of expensive oil imports and international conflicts.

There are clear guidelines governing who is entitled to the bonus: The purchase and leasing of new electric cars, certain plug-in hybrids that can run on both electricity and fuel, and electric cars with so-called range extenders are eligible. The latter are small combustion engines that increase the range of electric cars. The prerequisite is that the vehicle has been registered since January 1st of this year. The amount of the state subsidy depends on the vehicle, income and family size and can be up to 6,000 euros. The bonus only applies to private cars, not to company cars.

The fear that Chinese car manufacturers in particular would benefit from the funding has not come true. According to initial evaluations, less than 15 percent of applications so far have been for vehicles from China.

According to government information, the existing funding totaling three billion euros is enough for an estimated 800,000 subsidized vehicles in the period from 2026 to 2029. According to Schwope, as soon as the budget is used up, the next market collapse will follow. “Recovery will then take one to two years.”

Meanwhile, the boom in demand continues. According to the Federal Motor Transport Authority, around 86,600 purely electric cars were registered in September. That is around 95 percent more than in the same month last year.