European Union mulls bloc-wide EV purchase incentives

  • Speaking at the World Economic Forum in Davos earlier this week, German Chancellor Olaf Scholz, whose country scrapped its own EV purchase incentives back in 2023, said that his proposal to introduce EU-wide purchase subsidies for electric cars has been picked up by the European Commission.
  • While many EU states still offer tax incentives for EV ownership, previous purchase incentives offered by many countries have now ended – which, in some countries, saw rushes to buy EVs ahead of such schemes ending.
  • If the incentives programme is approved, the EU’s EV market would exist in stark contrast to the U.S., where newly-elected President Trump has ordered an end to EV incentives introduced under his predecessor, Biden.

EU to consider standardised purchase incentives for electric vehicles

Currently, the purchase incentives offered by each EU state varies significantly. While all states have some form of tax benefit for electric vehicles, some EU members have never implemented EV purchase subsidies – which can partly explain the significant variation in EV sales from country-to-country. Under these new proposals, which would still need to be approved by the parliament, all members would take advantage of one standardised purchase incentive.

As we explored earlier this week, the EU hit an impressive milestone last year after EVs remained ahead of diesel for new car market share across 2024 – with BEV market share standing at 13.6% across the bloc. However, when market share is broken down state-by-state, there are still some countries such as Croatia and Poland where BEV market share remains at or below 3%. If approved by the commission, these harmonised subsidies could particularly help such countries where BEV sales have lagged behind the rest of the bloc. That’s particularly important, as the EU’s 2035 ban on the sale of new petrol and diesel cars gets ever closer.

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Following this news out of Davos, we should hear more about these proposed incentives in the coming months. It remains to be seen whether these incentives would apply to both consumer and commercial EV purchases, and whether these subsidies and incentives could also cover the charging infrastructure side – which plays another crucial part in mass EV adoption.

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