Maybe Germany Should Just Revive Its EV Incentives – CleanTechnica

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The highly esteemed Steve Hanley wrote an interesting article this morning about the Volkswagen “earthquake” that is hitting Germany at the moment. I recommend reading that piece before this one. There’s a lot in there about the broader global EV market, the EV situation in Germany and at Volkswagen Group, and special status of German autoworkers and the auto industry both historically and at the moment. But there’s one big issue that stands out to me, particularly since it’s been a shocking disruption since it occurred last December.

Every industry relies on having at least somewhat predictable rules and regulations, and that includes available incentives. This is nothing new and is basically one of the ABCs of business and economic governance. So, in a country as developed as Germany, and especially given how important the auto industry is there, it was shocking to see the federal policymakers very suddenly and unexpectedly pull the rug out from under EVs at the end of 2023. It was immediately clear that this was not something people or companies saw coming, and that it massively disrupted the EV market in the largest auto market in Europe.

My thought when it happened was that it was so disruptive and odd that it would be reversed pretty soon afterward. I actually think many consumers there thought the same, leading to an even bigger slump in EV sales than would have occurred if it had been expected or planned and had happened at the same time. My hunch since then is that many buyers are waiting for those incentives to come back to buy an EV. But the decision hasn’t been reversed, and I haven’t even seen serious discussion of bringing back the subsidies that were cut.

The EV industry in Germany has truly been disrupted, and because of how big the market is, it’s put a stain on the EV growth story of Europe and even globally. The hit to the German market has hurt EV narratives around the world.

But even more than that, we’re really starting to see that it is severely hurting major German automakers, including its largest, Volkswagen Group. Based on what Steve wrote this morning, things seem to be teetering on the edge over there in Germany. Volkswagen is on the verge of laying off tens of thousands of people who were supposed to be guaranteed lifetime employment. The Volkswagen workers union (Works Council) is having none of it and is seemingly prepared to enact a massive strike, one that would just hurt Volkswagen Group (and its workers) that much more. If an amenable solution isn’t found quickly, this could get nasty, and I wonder if it wouldn’t even lead to violence on the streets. Tensions are high. But what is the solution? The auto market has shrunk, the EV market is facing a super tough period due to those sudden and unexpected subsidy cuts, and Volkswagen’s EVs simply aren’t as competitive as those from Tesla and from China for many consumers.

I’m not saying this is a long-term solution, but given that Volkswagen Group is between a jagged rock and a deathly hard place, and given how important that is to Germany as a whole, it seems like a no-brainer to me that the country’s policymakers should work overtime to find a way to bring back the incentives they suddenly dropped through a trap door in December. Maybe I’m too out of touch with political reality in Germany, but this seems to me like an obvious temporary solution that would at least fix a massive mistake in policy planning and action from the past year and would give a boost to the German EV and auto industry.