The European Union plans to introduce bloc-wide purchase incentives for electric vehicles to support struggling EU automakers, German Chancellor Olaf Scholz announced at the World Economic Forum.
The announcement comes as EV sales across Europe declined in 2024, with market share dropping 1% according to the European Automobile Manufacturers Association (ACEA).
“E-mobility is the future, there is no doubt about that,” Scholz said. “Anyone who suggests otherwise is damaging our industry. I am delighted that the President of the Commission has now taken up my proposal for harmonised Europe-wide purchase premiums for e-cars.”
Germany saw EV sales fall 18% in 2024 after ending its national subsidy program in 2023. Scholz’s Social Democrat party now proposes a temporary tax reduction for EV purchases ahead of February 2025 elections.
The UK won’t benefit from the EU incentives, having ended its Plug-in Car Grant in 2022. However, British automakers have offered substantial discounts to maintain sales growth.
The Society of Motor Manufacturers and Traders (SMMT) reports manufacturers provided average discounts of £12,000 per electric vehicle to meet the UK’s Zero-Emission Vehicle mandate requirements. The organization calls these discounts unsustainable and advocates for government support, including a 50% VAT reduction on new EVs.
These manufacturer incentives, combined with favorable company car tax rates, helped boost UK EV sales by more than 20% in 2024.
The UK became Europe’s largest EV market in late 2024, with 381,970 units sold – a 21.4% increase from 2023. This narrowly exceeded Germany’s 381,000 units, where sales were affected by subsidy changes and strategic delays.
Scholz’s broader economic vision calls for a stronger Europe with reduced bureaucracy and enhanced industrial competitiveness, particularly in response to potential changes in U.S. leadership and ongoing geopolitical challenges.
