The German electric car market is stagnant

Electric car sales have dropped sharply in Germany, as concern grows across the continent about zero-emission cars.

According to the latest figures from the European Automobile Manufacturers’ Association (the trade body), sales of electric vehicles in Germany, Europe’s biggest market, dropped by 29 percent year-over-year in march. In the European Union as a whole, the drop in sales was 11% compared to the previous 12 months.

Registrations have nearly been halved in Norway, a country that has taken the lead with tax breaks and incentives to encourage motorists to buy green cars. Nine out of ten sales were zero-emission vehicles, making Norway the fourth largest market for electric cars in Europe.

Britain now leads Europe in the sale of electric cars due to the collapse in demand. Sales in the UK increased by almost 4 percent in March to reach 48,000, and by 10% in the first quarter of this year. In a market that is growing faster, commentators in the industry are worried about the fact that, as a percentage of all registrations, electric cars in UK has fallen to 15,2 percent from 16,6 percent in 2023 or 2024.

Tesla, which is the largest seller in several countries, highlighted this slowdown by announcing it would layoff 14,000 employees or 10% of its workforce.

Multiple factors have been blamed for the sharp drop in sales. The price of these vehicles is typically 50 percent higher than petrol models, and there are few affordable options below the equivalent of £20,000. There is also evidence that consumers are resistant to this technology due to concerns about the range and lack of charging infrastructure.

Other factors that affect sales are the squeezed incomes of households, high interest rates, and the lack of government incentives for switching.

German government stopped subsidising electric car purchases, which has reduced demand

Germany abruptly abandoned its €4,500-per-electric-car subsidy before Christmas and there has been talk in Brussels that EU leaders are prepared to water down CO2 reduction targets under pressure from motor manufacturers. Sales in Britain dropped almost immediately following the decision of the government to postpone the prohibition on petrol and diesel vehicles to 2035.

Germany has lost its position as Europe’s leading manufacturer of zero-emission cars due to the decline in sales. This is despite Volkswagen, BMW, and Mercedes-Benz all of whom have sought to lead this drive towards cleaner vehicles.

Germany registered 94,000 electric vehicles in the first quarter last year. In the first quarter of this year, registrations fell by 14 percent to 81,000. In the same time period, Britain went from selling 76,000 to 84,000 electric cars, thanks to tax breaks for company car and fleet purchase.

France is on its way to surpassing Germany in terms of sales. Its numbers have risen by 23 percent in the first quarter of this year, from 64,000 units to 79,000. The fact that subsidies ranging from €2,500 up to €12,000 remain in place is not a coincidence.

Patrick Hummel is an automotive analyst for UBS. He said, “Affordability” is the key. Western electric vehicle markets are plateauing.

Charles Lester is an electric vehicle data analysts at Rho Motion. He said, “We’re seeing a cooling in growth across Europe. This can be explained by Germany’s decline, as recent subsidy reductions dampen the demand. This can be partly attributed to the saturation of the Norwegian market. “As Norway’s growth slows, so do Europe’s numbers.”