Environmental bonus/innovation bonus: Promotion of plug-in hybrids - Stricter requirements planned - Update September 16, 2021

The environmental bonus was passed in Germany in 2016. As a bonus for purchasing a new electric vehicle, it is intended to increase demand as an incentive to buy. The environmental bonus also applies to hybrid electric vehicles and hydrogen/fuel cell vehicles.

More about it here:

• Promoting electromobility is seen as the key to climate-friendly mobility, which should take Germany one step further towards EU climate neutrality by 2050.

Purchase bonus for new cars? – Image: Xpert.Digital

The Association of the Automotive Industry (VDA) and the Association of International Motor Vehicle Manufacturers (VDIK) critically assess the stricter requirements for plug-in hybrid vehicles (PHEV) planned with the extension of the innovation bonus.

“We fundamentally welcome the extension of the innovation bonus. But the planned elimination of the CO2 criterion will slow down the ramp-up of electromobility in the short to medium term. A large number of plug-in hybrids that were previously eligible for funding are becoming less attractive for customers. They may then decide on a vehicle with a classic drive and that may not be politically desirable. The technical challenge of increasing the minimum range to 80 kilometers can be solved for the automotive industry in the medium term. But here too, the industry needs planning security, which is why we are calling for the deadline to be left at the beginning of 2025,” says VDA President Hildegard Müller.

VDIK President Reinhard Zirpel said: “As things currently stand, this would mean that around 50 percent of the plug-in hybrids offered by VDIK members would no longer be eligible for funding. This is the wrong signal, especially as the electromobility market ramps up. Smaller and therefore cheaper vehicles are also affected by these stricter requirements.”

The tightening in the form of increasing the purely electric minimum range to 80 km on January 1, 2024 was previously planned a year later. This cut also contradicts the planning security that is important for the automotive industry. For many vehicles, meeting this requirement is planned in conjunction with a model change, which cannot be brought forward by one year at will. With their flexibility, plug-in hybrids in particular represent an important component in the success of electromobility. In the first half of 2021 alone, plug-in hybrids accounted for over 50 percent of the newly registered vehicles with electric drives.

Electric plug-in hybrids are currently being promoted that do not emit more than 50 grams of CO2 per kilometer driven or must achieve a minimum range using only the electric drive. The current regulations stipulate that this minimum range is 40 kilometers if purchased by December 31, 2021. If purchased after December 31, 2021 and before January 1, 2025, the minimum range will increase to 60 kilometers and then to 80 kilometers if purchased after January 1, 2025 in order to continue to be eligible for funding.

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Since mid-2020, the spread of electric vehicles in Germany has made a significant leap forward. The decisive factor for this is the introduction of the innovation bonus on July 8, 2020, with which the federal government doubled its funding for the purchase of an electric vehicle.

Federal Minister Peter Altmaier: “We have seen a significant boost in electromobility since the introduction of the innovation bonus. The number of applications remains at record levels. More premiums were claimed in the first half of 2021 than in the whole of last year. A total of 1.25 billion euros. There will be record funding for electric cars this year. That’s why we in the coalition have decided to continue funding until the end of 2025 so that the market ramp-up of electromobility continues to gain momentum.”

Torsten Safarik, President of the Federal Office of Economics and Export Control (BAFA): “With the introduction of the innovation bonus, demand for the environmental bonus has increased significantly. 273,000 vehicles were applied for in the first half of 2021 - already more than in the entire previous year. This is a strong signal for climate-friendly mobility in Germany.”

With the introduction of the innovation bonus, the number of applications for the environmental bonus increased significantly. There were new application records every month in the second half of 2020. In December 2020, the number of applications reached a temporary peak of 53,566 applications. In March 2021, the number of applications was again just under 52,000.

From January to the end of June 2021, funding was applied for for 273,614 vehicles. This is a strong signal for climate protection and shows the population's sustained increasing interest in electric vehicles. As of July 1, 2021, a total of 693,601 vehicles have been applied for since funding began in 2016.

The innovation bonus, which doubles the federal share of the environmental bonus, will be extended beyond 2021 until December 31, 2025, in accordance with the resolution of the Auto Summit (KAM) in the Federal Chancellery on November 17, 2020. The Federal Ministry for Economic Affairs and Energy will carry out this extension shortly.

With the government's share of the environmental bonus doubling, up to 9,000 euros can be applied for as funding for electric vehicles that cost less than 40,000 euros net list price; for hybrid cars it is 6,750 euros. For electric vehicles with net list prices over 40,000 euros, there is a subsidy of up to 7,500 euros for purely electric vehicles and up to 5,625 euros for hybrid cars.

“The changed funding guidelines for the 'Innovation Bonus' will be published in the Federal Gazette today at 3 p.m. and will come into force tomorrow. This doubles the state share for promoting electric cars. In the future, purely electric cars will receive funding of up to 9,000 euros; Plug-in hybrids receive funding of up to 6,750 euros,” said the Federal Ministry for Economic Affairs and Energy in its press release dated July 7, 2020.

Amount of the environmental bonus for the purchase of electric vehicles – Image: Xpert.Digital

Federal Minister of Economics Peter Altmaier: “We are doubling the state share when purchasing an electric car and are thus providing a clear incentive for consumers to buy an electric car. We want to promote the switch to electric cars and give electromobility in Germany a new boost.”

BAFA President Torsten Safarik: “The new funding rates of up to 9,000 euros make switching to an electric car even more attractive for citizens. With the lean, one-stage process, we at BAFA are implementing the new innovation bonus efficiently and in a citizen-friendly manner.”

From July 8, 2020, the federal share in the existing system of the so-called environmental bonus will be doubled for a limited period until December 31, 2021. The manufacturer's share remains unaffected. The following purchased or leased vehicles can benefit from the “innovation bonus” – even retroactively:

• New vehicles that are registered for the first time after June 3, 2020 and up to and including December 31, 2021, as well as young used vehicles whose first registration is after November 4, 2019 and the second registration is after June 3, 2020 and up to December 31 2021 will take place.

The “innovation bonus” is based on the results of the coalition committee on June 3, 2020. In addition to the temporary doubling of the federal share, the amended funding guidelines provide for a ban on cumulation with funding from other public funds. This is intended to prevent over-funding. The European Commission has examined the “innovation bonus” under state aid law.

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