European Non-Profit Organization: German Government Needs to Introduce More Measures to Encourage Companies to Purchase EVs

According to Reuters, on April 23, the European non-profit organization Transport & Environment stated that German companies lack sufficient incentives to choose EVs when purchasing new vehicles.

Last month, Germany's EV sales increased by 38.9% YoY, but Transport & Environment attributed this more to the EU's policies introduced in January rather than Germany's own policy push.

Stef Cornelis, head of Transport & Environment's EV fleet business, told Reuters, "As automakers are willing to do anything to avoid fines from the European Commission, they accelerated EV sales... thus targeting Germany, the EU's largest car market."

In a report released on April 23, Transport & Environment stated that in Germany, a corporate buyer purchasing a heavy gasoline SUV would pay a net tax of 7,072 euros (approximately $8,035.91) over four years, as depreciation and VAT deductions exceeded purchase tax, ownership tax, and benefit-in-kind tax. If a company opts for a small electric compact SUV, it would pay a net tax of 11,471 euros during the same period. In comparison, the average net tax for purchasing a gasoline-powered compact SUV is 2,753 euros.

Transport & Environment noted that this gap is the smallest in Europe. In contrast, in Denmark, purchasing an electric compact SUV saves 43,340 euros in net tax over four years compared to a gasoline-powered SUV, while buying a business gasoline-powered SUV would cost companies an additional 208,690 euros in taxes.

According to Transport & Environment, corporate sales account for 60% of total car sales in the EU. The organization stated in its report that reforming the car tax system across Europe would stimulate EV demand, generate revenue, and make the green transition more socially just.

Earlier this month, Germany's future government, composed of conservatives and the center-left Social Democrats, agreed on a series of measures to boost EV sales in Europe's largest economy. These incentives include raising the tax benefit cap for corporate EV purchases to 100,000 euros, introducing special depreciation subsidies for EVs, and exempting EVs from vehicle tax until 2035.

However, Transport & Environment believes these measures are insufficient. The organization noted that Belgium's corporate EV adoption rate reached 41.1% last year after reforming its corporate car purchase system in 2021, while Italy's EV sales continued to grow due to the reform of its benefit compensation system in January.