The significant reduction in subsidies for electric cars can have two consequences: either the market collapses or the manufacturers grant significant discounts. There are first signs of the second way. Even premium manufacturer Tesla cannot completely escape the discount trend.

Electric car prices are coming under pressure. The extremely expensive vehicles are much more difficult to get to the woman or man since the reduction in state subsidies. The consequences are discounts on new cars and falling prices for used electric cars. The trend has even reached luxury brands like Tesla.

The market has been shaken up for weeks. At the beginning of December, automotive expert Ferdinand Dudenhöfer published a forecast that caused a stir. In it he expects the sale of only 362,000 electric cars in 2024 after sales of around 750,000 electric cars in 2022. This would almost halve the market share of electrically powered automobiles in new car sales from 27.8 percent to 14 percent.

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According to the guidelines of the federal government, plug-in hybrids have not been subsidized at all since this year. For fully electric battery vehicles, the purchase premiums per vehicle have fallen to between EUR 4,500 and EUR 6,750 (previously EUR 7,500 to EUR 9,000) depending on the net list price. In addition, the funding pot is capped and, according to CAR estimates, will be exhausted by the end of 2023.

The premium for commercial registrations will no longer apply from September 2023. In addition, compared to the beginning of 2022, electricity prices have almost tripled and production costs for batteries are increasing, Dudenhöffer warns. On the other hand, company cars are still subsidized, which helps sales: company cars account for two-thirds of first-time registrations, and even 75 percent for plug-in hybrids, which continue to benefit from the 0.5 percent rule. This means that drivers of electric company cars have to pay less tax on this advantage (here only half) than if they drove a company car with a combustion engine.

Nevertheless, the bottom line is that the total funding is falling sharply, which makes sales difficult and puts manufacturers under pressure. Stefan Möller from the Leipzig electric car rental company Nextmove has been observing the markets for years, has good contacts with a number of manufacturers and runs a YouTube channel on the subject. He says in the MDR: “For private customers, the electric car is significantly less attractive because it is 4,500 euros more expensive.”

In contrast to Dudenhöfer, however, Möller is not really pessimistic because the order books of the manufacturers are still full from last year and these orders have to be processed first. In addition, the delivery bottlenecks for supplier parts are slowly easing. The shortage of materials in industry has eased noticeably, reports the ifo economic research institute this week. Only half of the companies surveyed suffered in December and bottlenecks, after 59.3 percent in November, this was the third decline in a row.

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Nevertheless, there is uncertainty among car buyers. The MDR quotes the managing director of a Dresden Opel car dealership with several locations. He describes how great the uncertainty is for his company and its customers: “Well, that will be a difficult task if the electricity price continues to go through the roof. If I now have less funding and then have to pay even more at the charging stations, the big question is whether the green idea will remain the same or whether the manufacturers will make adjustments in some way to keep the price at a certain level.”

And that is exactly what is becoming apparent: “We are seeing falling prices,” says Möller from Nextmove. They have currently fallen by a good ten percent in the last three months for used electric cars, and even more for some brands. Even more moves with the new cars. Portals such as carwow or offer substantial discounts. The Smart EQ fortwo convertible is currently 37 percent below the list price, the Renault Zoe is 28 percent cheaper and the popular Fiat 500 is 24 percent cheaper on the market than it is in the manufacturer’s official price lists . Möller even expects premium brands to grant discounts. “This happens most directly at Tesla, where there is a clear requirement that production must be used at 100 percent capacity, and if demand does not match, then Tesla lowers the prices. Falling demand should actually be reflected in discounts coming back.”

Tesla boss Elon Musk made a corresponding statement in October. At that time, he was asked at an analysts’ conference about an unusually high difference between cars sold and cars produced. His answer: He assumes that he will be able to sell every electric car produced in the foreseeable future.

The consequences of this statement were the first discounts on new Teslas, which also became noticeable in Europe. Models 3 and Y could be found in stock on the European Tesla website – and thus an indication that not every car leaving the German Gigafactory had already been sold. And on individual days at the end of the year, individual models could actually be found with a discount of up to 3000 euros.

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