At the end of last year, the German Association of the Automotive Industry (VDA) predicted that the demand for EVs in Germany will fall in 2024, despite constant growth in the world market. This already happened in January, when demand dropped by 54.9 percent compared to the same period in 2023. One of the reasons is the abolition of the subsidy.

The German government’s sudden decision to temporarily suspend subsidies for the purchase of new EVs has forced manufacturers to reduce vehicle prices in order to remain competitive with other manufacturers. As a reminder, BYD lowered prices by 15 percent, while Dacia reduced the price of the Spring model by 10,000 euros.

Buyers turned to proven options, gasoline and diesel cars, which had a decline in sales last year. However, the current situation with EVs has resulted in demand for cars with internal combustion engines. In January, 9.1 percent more gasoline cars were sold compared to the same period in 2023, while demand for diesels increased by 9.5 percent.

Another major reason for the decline in demand for EVs is the current state of the German economy, which has recently been in crisis, as well as geopolitical tensions in the region. Inflation, high prices and poor infrastructure of charging stations also affect demand. Even the leading car rental companies are looking for alternatives for their fleets due to the high cost of maintaining electric vehicles.

The VDA expects the German car market to drop by 1 percent to 2.82 million in 2024. At the same time, the global market is forecast to grow by 2 percent to 77.4 million cars. “Problems in the supply chain have largely been resolved, but the business environment for German carmakers remains challenging,” said VDA chief economist Manuel Kallweit.

Source: Reuters