Germany must do more to persuade companies to buy EVs, campaign group says

By Alessandro Parodi and Riham Alkousaa

(Reuters) -German companies buying new cars do not have enough incentives to choose electric vehicles over heavy petrol SUVs, research and campaign group Transport & Environment (T&E) said on Wednesday.

Germany last month reported a 38.9% jump in EV sales, but T&E says this had more to do with the EU's introduction of CO2 emission targets in January than with national policies.

"As carmakers wanted to avoid paying penalties to the European Commission at all costs, they speeded up EV sales... targeting EU's largest car market Germany," T&E's director for Electric Fleets, Stef Cornelis, told Reuters.

In a report published on Wednesday, T&E said that corporate buyers of a heavy petrol SUV in Germany recover on average 7,072 euros ($8,035.91) in net taxes over four years, as depreciation and value-added tax (VAT) deductions outweigh acquisition, ownership and benefit-in-kind (BiK) taxes.

If they opt for a smaller electric compact SUV, companies recover on average 11,471 euros over the same period, the report shows. That compares with 2,753 euros for a petrol compact SUV.

The gap is among the narrowest in Europe, T&E said. By comparison, four-year net taxes for an electric compact SUV in Denmark are 43,340 euros cheaper than for a petrol one, while buying an executive petrol SUV costs companies 208,690 euros in taxes.

Corporate sales are 60% of the EU's total, according to the Brussels-based group, which argued in the report that reforming car taxation around Europe would boost EV demand, generate income and make the green transition more socially just.

SUV sales accounted in 2024 for 58% of total car sales in Europe, data by research firm JATO Dynamics shows.

Germany's future government of conservatives and centre-left Social Democrats agreed on a set of measures earlier this month to boost electric vehicle sales in Europe's biggest economy.

The incentives include increasing the tax benefit limit for electric company cars to 100,000 euros, introducing a special depreciation allowance for electric vehicles, and exempting electric cars from vehicle tax until 2035.

T&E argues that the changes are not enough.

It said Belgium reached a corporate EV uptake of 41.1% last year after reforming its company car system in 2021, while Italy's EV sales are growing thanks to changes in its benefit-in-kind system introduced in January.

($1 = 0.8800 euros)

(Reporting by Alessandro Parodi in Gdansk and Riham Alkousaa in BerlinEditing by Frances Kerry)