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Does the shift from combustion to electric vehicles continue?
The boom of electric cars in Germany already seems to be over again. Sales have collapsed, many people want to continue driving with gasoline and diesel in the future, and even the ban on selling new combustion engines in the EU from 2035 is wavering.
And then there are the CO2 fleet limits: They could trigger a discount battle for electric cars in the second half of the year. What is next for the transformation of car traffic?
The Initial Situation
After several boom years spurred by government incentives, new electric car registrations in Germany plummeted last year. According to the Federal Motor Transport Authority, their share of new registrations in 2024 was 13.5 percent. The existing stock looks even worse: as of the end of October 2024, there were 1.6 million purely battery-powered vehicles (BEVs) on German roads.
Their number is now likely around 1.7 million. That's a good 3 percent of the stock. A year ago, it was 1.4 million or just under 3 percent. This contrasts with 44 million combustion engines. The transition is sluggish.
How do consumers feel about the transition?
Reserved: 38 percent of car drivers surveyed in the new DAT Report can imagine switching to a BEV. But the number is declining: three years ago it was 46 percent. At least - among consumers who have already driven a BEV, 52 percent can imagine making the switch.
However, that by no means guarantees it will happen: of those who actually bought a new car, only 23 percent considered a purely electric vehicle, and among the actual purchases, only just under 15 percent were, as shown in the new registration statistics.
Where is the problem?
According to the DAT Report, new car buyers mainly cited infrastructure, limited range, acquisition costs, and charging times as reasons against buying an electric vehicle. However, consumers also mention reasons against combustion engines: the desire for new technology, that an electric vehicle fits their mobility needs, and environmental considerations. And half of those who have already driven electric vehicles say that affordable models are currently missing from the market.
Thomas Peckruhn, the vice president of the German Motor Vehicle Trade Association (ZDK), also complains about a lack of BEV models "especially in the cheaper segments. We need entry-level models," he emphasizes. In any case, the removal of the purchase premium has "completely unsettled" customers, and public charging is also far too expensive.
"At fast-charging stations, the cost per kilowatt-hour is sometimes more than one euro – with such operating costs for an electric car, the customer who cannot charge more cheaply at home or work will not switch."
What happens next?
There could be a brief boom at the very beginning. Because automakers have postponed BEV registrations from 2024 to 2025 in order to better meet the tightened CO2 fleet limits at the beginning of the year, experts expect a surge in new registrations at the start of the year. But afterwards, it will be difficult. While there will be some changes in the model range, Peckruhn says, "the expansion of the range will really help only in mid-2026."
This will also become a problem for car dealerships.
"Manufacturers partly pass on the pressure they receive from fleet limits directly to the dealerships," says Peckruhn. If the dealer does not meet certain quotas, it costs a lot of money. "As a result, it becomes vital for the trade to sell electric cars. And this will also happen with offers that push the limits. In the second half of 2025, a price war is expected for electric and plug-in hybrids."
It Depends on Politics
"What will be decisive is what a future federal government does. If you want a rapid increase in electromobility, a premium is needed. And especially with public charging, we need to move away from the high costs," says Peckruhn. "Basically, price incentives are very effective," he is convinced. "We saw that with the drop in new registrations after the premium was removed." An assessment that Peckruhn is not alone in."
There is also a discussion at the European level on how to promote the sales of e-cars. Debate includes purchasing premiums, joint transnational projects supported by government funds, and relaxed state aid rules so that member countries can more easily launch their own programs. Which measures the EU Commission will specifically propose remains open to speculation by the German Press Agency. On Thursday, a dialogue will begin to discuss the most suitable measures. Based on this, the Commission will then take action.
Chancellor Olaf Scholz (SPD) recently said that Commission President Ursula von der Leyen has "since taken up" his proposal for Europe-wide harmonized purchase premiums for e-cars. EU Commission Vice-President Teresa Ribera told the "Financial Times" that EU officials are working on options for an incentive program. In the interview, she personally advocated for European measures instead of national subsidies.
And What About the Combustion Engine?
According to a survey by Deloitte, it is gaining in popularity. When asked about their purchase intentions for new or used cars, 53 percent recently named it as their preferred option. That was 8 points more than two years ago. Actually, no new combustion engines should be sold in the EU from 2035. But there is resistance to this, especially from conservative circles. Other forces, such as the Greens and the SPD, want to stick to the regulation.
Whether the so-called combustion engine phase-out will remain is currently unclear. The debate includes whether newly registered cars with combustion engines that run on climate-friendly fuels should be allowed in the future.
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