The German car market experienced a sales decline in May, primarily driven by the ongoing slump in the electric vehicle (EV) sector following the end of government subsidies, according to figures released on Wednesday.
100% Electric Model Sales Plunge
The Federal Motor Transport Authority (KBA) announced that Germany registered a total of 236,425 cars in May, marking a 4.3% decrease compared to May 2023. Sales of 100% electric models, in particular, dropped by 30.6% year-over-year, marking the fourth consecutive decline for this segment.
This decline is attributed to the Olaf Scholz government’s decision last December to abruptly halt its EV purchase subsidy program due to budgetary constraints. As a result, electric cars accounted for only 12.6% of the car market in May, a significant drop from the average of over 18% in 2023.
Traditional Engines Gain Ground
While hybrid car sales stagnated (-0.3%), traditional engines saw an increase: gasoline-powered vehicles rose by 2.1%, and diesel by 3.2%.
To curb the “massive” drop in electric vehicle sales, the German Association of International Motor Vehicle Manufacturers (VDIK) is calling for “political signals and countermeasures” to “restore consumer confidence in e-mobility,” said its president, Reinhard Zirpel, in a statement.
“This includes the accelerated expansion of charging infrastructure as well as strategic approaches to reduce electricity prices in Germany, which are among the highest in the EU,” he added.
Sales Far Below Pre-Pandemic Levels
Overall sales remain far below pre-pandemic levels, roughly 29% lower than in 2019, highlighted the German Association of the Automotive Industry (VDA).
“The economy is weakening in the long term, individuals and businesses remain reluctant to make major purchases, and new car prices remain relatively high,” explains Constantin Gall, an analyst at EY.
Challenges for Electric Vehicle Adoption
Electric cars have captured 14.6% of the European market in 2023. However, they remain confined to higher-priced segments, with models like the VW ID.3 or Tesla Model 3 selling for around €40,000.
Manufacturers are struggling to develop entry-level models, making it difficult to reach new customer groups.