Germany makes EVs tax-free for 10 years

December 01, 2016

Germany has increased incentives for electric vehicles (EVs) in a bid to encourage demand. Zero-emission vehicles are now exempt from annual car tax for 10 years.

The change was introduced in November instead of in 2020 as originally planned, Automobilwoche reports.

The move doubles the length of time an EV can be driven without incurring annual road taxes. This will help stimulate demand in both the new and used car markets.

By doubling the period of the tax exemption, the savings will extend to second and third owners of EVs, where tax makes up a larger proportion of the value of a car.

In addition, owners of EVs can charge their electric car at work and have the cost paid for by the company without incurring benefit-in-kind tax.

The initiatives are part of a wide-ranging programme by the German government to increase demand for EVs.

The introduction of a €4,000 incentive for electric vehicles at the start of July has been less successful than the government hoped.

Demand declined from 2,000 applications after launch to 1,000 in August and 1,400 in September.

EVs have a higher purchase price than their petrol or diesel counterparts but the €4,000 incentive offered by the German government has significantly reduced the price differences.

For example, the BMW i3 and Renault Zoe are cheaper to buy new in Germany when the incentive is included than the BMW 120d (Advantage) or Renault Clio dci90 (Experience) respectively, although this doesn’t include battery lease costs.

Resistance to EVs is caused by a number of factors, including range anxiety concerns, a lack of charging infrastructure, a limited choice of cars and uncertain residual values.






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