Federal Transformation costs of e-mobility in Germany: Effectiveness and efficiency of EV incentives between 2015 and 2023

This study evaluates Germany’s federal electric vehicle (EV) incentive package, analyzing its impact on the automotive market, consumer purchase decisions, and environmental outcomes. Utilizing data from the German Ministry of Finance, Federal Motor Transport Authority, and Federal Office of Economics and Export Control, the research assesses new EV registrations, as well as federal total, specific, and CO₂ abatement costs from 2015 to 2023. Results show the environmental bonus significantly boosted EV adoption, with a 250% increase in subsidized vehicles between 2020 and 2021 and battery electric vehicles (BEV) comprising 18.3% of new registrations by 2023. Fiscal analysis uncovers combined costs of tax revenue shortfalls and subsidies at approximately EUR 17 billion, underscoring substantial financial commitments. Nonetheless, the incentives have significantly fostered EV adoption and environmental goals, achieving CO₂ savings of 3 million tons, excluding production emissions compared to assumed average petrol cars. Conclusively, Germany’s EV incentives have effectively promoted electric mobility despite fiscal and societal challenges. These findings inform policy design, advocating for a balanced approach to innovation and societal impacts on electric mobility’s progression.