In a surprising turn of events in the electric vehicle (EV) market, Germany witnessed a steep decline of 58 per cent in plug-in car sales in December 2023, thanks to a sudden elimination of generous incentives for all-electric cars. The German government made steep incentive cut of up to $4,900 (approx. €4,500) on purchase of new EVs, effective from 17th of December. These cuts significantly impacted the rechargeable car market. Even American electric car pioneer Tesla Motors experienced a dip in sales.

Overall, new passenger car registrations dropped 23 per cent to 241,883 units in the month of December, but the full-year results for 2023 demonstrated resilience, with registrations reaching a total of 2,844,609 units. This figure marks a growth of 7.3 per cent from the previous year.

The repercussions of the incentive cut were mainly noticeable in the plug-in electric car segment in December, with total new plug-in electric car registrations amounting to 72,548 units, down 58 per cent drop year-over-year. However, it is worth noting here that the month of December in 2022 was an outlier, recording more than 174,000 plug-in registrations with a 55 per cent share.

When we break down the plug-in car registrations for December last year, we find that registrations of battery electric vehicles (BEVs) experienced a 48 per cent fall year-over-year, totaling 54,654 units, while registrations of plug-in hybrid vehicles (PHEVs) tumbled 74 per cent to 17,894 units.

In spite of those challenges, there were some positive aspects. Approx. 30 per cent of all new vehicles registered last month were rechargeable, which signifies continued interest in electric mobility. BEVs saw a decline but maintained a relatively high market share of 22.6 per cent. The incentive cut didn’t deter the adoption of EVs altogether, highlighting a constant interest in green & sustainable transportation.

Looking at the full-year figures for last year, notwithstanding weaker months, BEVs registered an increase of 11 per cent year-over-year, reaching 524,219 units and securing an 18.4 per cent of the market. PHEVs, on the other hand, experienced a decline of 51 per cent in registrations, totaling 175,724 units.

Looking forward, as the German electric car market navigates the evolving landscape, the biggest question looms over the prospects for the year of 2024. The incentive cuts coupled with new challenges arising from supply chain disruptions and other issues give rise to uncertainties.