“It could hardly be more brutal”

LThe judges of the Federal Constitutional Court in Karlsruhe, Germany, did not only make friends on November 15 by rejecting the government budget. They estimated that the executive did not have the right to use a reserve of sixty billion euros set up for the crisis linked to Covid-19 for other budgetary uses. As a result, a hole of more than seventeen billion euros in the 2024 budget that had to be filled urgently with spending cuts. We now know the first victim, the German automobile industry. And behind it, consumers who dreamed of buying an electric car, as well as the entire environmental policy.

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On Saturday December 16, the government announced that from Monday December 18 bonuses for the purchase of electric cars (up to 4,500 euros per vehicle) would be eliminated. It could hardly be more brutal. Since 2016, Berlin has spent nearly ten billion euros to subsidize the purchase of more than two million electric cars.

The news couldn’t have come at a worse time. Around the world, electric car sales are seriously slowing and the forecast for 2024 is not good. The economic situation and restrictions on bonus policies are drying up the market. Certainly, it is still progressing at the end of the year in Europe and the share of electric has now overtaken diesel, but the association of European manufacturers expects much lower overall market growth in 2024. The German decision will not help matters. But she won’t be the only one. The restriction of the French bonus to European cars should also slow down sales. Already, for two months, discounts, often of more than 10%, have been available almost everywhere to wake up the market.

Stocks are piling up

The worst is happening in the United States where the lack of infrastructure is turning away buyers. Ford announced in early December that it would halve the production target for its electric flagship model, the F150 Lightning pickup, as stocks pile up. They are four months in the American industry, and even eight months for the electric Ford Mustang.

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The matter is serious because the entire structure of support for the energy transition is at stake if it is not considered a priority in budgetary decisions. We see this in Germany, which will probably not meet its objective of selling fifteen million electric cars by 2030. As for the imperative of “green” reindustrialization, accompanied by a small touch of protectionism, it is not not demonstrated, far from it, that it is compatible with Europe’s climate ambitions.