Why Germany is so slow in moving to electric vehicles

DW (English)

Just 3% of the cars on German roads in Germany are electric, while in Norway the figure is over a quarter. The Nordic country has forgone about €55 billion in car taxes over two decades. Can Germany afford the same?

Transcript

00:00World champions in EV adoption. Norway leads the charge to electro-mobility,

00:06while in Germany, the roads are still full of diesel and gas-powered cars.

00:12Last year, close to 90% of all new cars bought in Norway were electric vehicles.

00:17In Germany, EVs accounted for barely 14% of new car sales.

00:24Why the huge difference? Can Germany catch up soon? And how?

00:31In 2025, we will celebrate reaching a climate goal.

00:35Well, almost. The goal was for 100% of all new cars sold in Norway this year to be EVs.

00:42But even reaching almost 90% makes Norway the world leader,

00:46and earned its EV lobbyist a place on Time magazine's list of the world's 100 climate leaders.

00:53We have a very clean city. The air is fresh.

00:57And now, what I recently noticed is also that in winter, when we have snow,

01:02at the end of the day, that snow is still white.

01:06Meanwhile, in Germany, emissions-free vehicles have yet to take off.

01:11Here, just 3% of the cars on the road are battery electric. In Norway, it's over a quarter.

01:17Industry structures could play a role.

01:19Germany has a large and to date highly successful auto industry.

01:22Norway doesn't. An advantage when it comes to electrification.

01:42Even the German government can't agree on what drive technology to back.

01:46Some parties want automakers to be free to keep developing buses that run on biofuel.

01:53And hydrogen cars and trucks.

01:56A counterproductive strategy, says this energy researcher.

02:17Cuts to Germany's budget also led the outgoing government to slash financial incentives for EV purchases.

02:24Carmakers felt the effects right away.

02:40And that lack of demand for EVs has plunged German automakers into crisis.

02:45Volkswagen had already converted its Spickau plant in Saxony to build electric cars.

02:52Now, contract workers there are being laid off.

02:57Yet the Spickau factory produces VW's ID.4 and ID.3 models.

03:05Just the kinds of EVs that are highly prized in Norway.

03:08At least that's what this Volkswagen importer says.

03:11We have the range from Volkswagen with ID.4, ID.5, ID.Bus and now also ID.7 with 4x4. That's essential.

03:18So I think now we have really a good balance where we can really serve a big customer group in Norway.

03:29But how did Norway make electric vehicles so attractive?

03:32We asked EV lobbyist Kristina Bu.

03:35First of all, Norway has used their tax system.

03:38First of all, Norway has used their tax system to not have tax on electric cars for many years.

03:44Now there's a bit tax.

03:46But also putting high and higher and higher taxes on petrol and diesel engine cars.

03:52So that's the main reason why we have succeeded.

03:56The tax breaks won over this family from Oslo.

03:59Four years ago they bought a Tesla, much to their children's delight.

04:04You can watch TV in it, like Netflix, YouTube and you can play games.

04:10And while the first generation of EVs struggled to cope with cold Norwegian winters, those days are long gone.

04:18Earlier when they had the first cars, I remember riding with a colleague where we went to and from work sometimes.

04:27And you had to turn off the heater in the wintertime.

04:30And you had to turn off the heater in the wintertime.

04:33To make the battery last enough to get all the way home.

04:37But the new generation of EVs has batteries powerful enough to deal with the Nordic weather.

04:42So switching to an electric car was worth it.

04:45Not just for the tax breaks, but for the other perks too.

04:49For example here, there's the bus lane right next to us right now.

04:52And now there's a sign where it says we can't drive there Monday through Friday.

04:58So it was a great way to just like jump the queue basically.

05:03EV drivers are no longer so privileged.

05:06Now they're only free to use Oslo's bus lanes on weekends.

05:10And luxury EVs with a price tag of over 500,000 Norwegian kroner no longer qualify for tax breaks.

05:17That's because funding electric mobility is an expensive proposition.

05:22Over the last 18 years, the Norwegian state has waived the equivalent of around 55 billion euros in tax revenue to promote electric vehicles.

05:31That's a lot of money, though not for Norway.

05:38In 2024 alone, the state received the equivalent of more than 60 billion euros in oil revenue.

05:44More than enough to pay for its entire EV promotion scheme.

05:47So essentially, Norway can't afford to promote clean mobility because it earns a fortune drilling for and selling dirty oil and gas.

05:57Which leads us to ask, can Germany, with its current budget deficit, afford to offer such generous subsidies as Norway?

06:05The tax revenue per electric vehicle was at more than 10,000 euros per vehicle for many years.

06:14That means if you think about it, here in Germany, there are several million electric vehicles that you would like to have in stock.

06:21Then you are very quickly at billions of euros.

06:24Because the tax revenue per electric vehicle is so high.

06:28Based on numbers alone, there were already more EVs on German roads a year ago than there are in Norway today.

06:35This apparent contradiction is explained by the size of their markets.

06:39With roughly 50 million cars, Germany's market is around 16 times larger than Norway's.

06:45To promote EVs in such a big market, Germany has to invest a lot of money.

06:50With roughly 50 million cars, Germany's market is around 16 times larger than Norway's.

06:56To promote EVs in such a big market, gas guzzlers must cost more, says Patrick Plötz.

07:12But are higher taxes for cars with combustion engines politically feasible?

07:17In Germany, many jobs still depend on the production of vehicles that run on gasoline or diesel.

07:23By contrast, Norway doesn't have a domestic auto industry.

07:27It imports all of its cars from countries like the US, Germany and China.

07:32The tiny Norwegian market is highly competitive.

07:35It's seen as a harbinger of the coming EV market in the EU.

07:39Chinese brands also figure prominently here.

07:42Tesla is still the best-selling single brand.

07:45But taken together, Volkswagen Group, whose brands include VW, Porsche, Audi and Skoda, sells more.

07:51Altogether, Chinese newcomers have a 9% market share, plus Volvo, which is now also Chinese-owned.

08:16Buyers profit from the price war being fought by EV manufacturers.

08:20And from electric cars' low operating costs, because Norway also produces its own green hydroelectric power.

08:27So electricity is relatively cheap in Norway, though the price varies according to the region and time of day.

08:33Like many EV owners, the Essens have an app to help them save money.

08:37Yesterday, the car was completely empty.

08:40Yesterday, the car was completely empty.

08:43And then I chose to charge it up to 80%.

08:47And now it's full.

08:48And then I can choose also here when to start the charging.

08:51And that's really relevant because the electricity is, of course, cheaper in the night.

08:56So we always start it in the middle of the night.

08:58Norwegian traffic researchers have calculated that the total cost of ownership for an electric car is even lower than for a used gas-powered one.

09:06The only stress factor for these EV fans is searching for a place to charge it.

09:11While that's never a problem at home in Norway, it is when they take their Tesla to visit family in Germany.

09:16We're really stressed. So no, it's a big difference to Norway here.

09:22It's definitely so much better here because it's kind of every corner that you can charge.

09:28Whereas in Germany, it's really hard to find those points.

09:31So there's still a way to go there.

09:34It's enough with the anxiety.

09:36It's the fear of not having enough battery to get where you want to.

09:43But is range anxiety really a thing?

09:50I think we have to say that the infrastructure is often a bit exaggerated in public debate.

09:56It is often argued that if we build enough charging stations, then electromobility will work.

10:02This is scientifically empirically hard to prove.

10:07By the end of 2024, Germany had around 34,000 fast-charging stations, four times as many as Norway.

10:15Though per capita, Germany has far fewer in comparison.

10:19And car manufacturers say Norway has done a better job of building the relevant infrastructure.

10:25They have actually followed that very integrated approach from the outset,

10:29making sure the charging infrastructure is in place.

10:33If the rest of Europe, including Germany, could do what Norway have done,

10:38we would be in a very different situation.

10:41Because the European auto industry finds itself in a very tough spot,

10:45flagging EV sales mean the EU will likely miss its targets for reducing CO2 emissions.

10:51The magnitude is about 16 billion euros potentially in fines.

10:56We now need a relief, but we also need a reality check to make it happen in a way that is feasible and manageable

11:03for industry, for consumers, for societies and for economies.

11:08Europe's car industry wants the EU to lower its EV adoption goals for five years.

11:15But wouldn't that just slow down the shift to electric mobility?

11:18The competition is charging ahead regardless.

11:21This technology shift is happening whether you like it or not.

11:25So European car manufacturers just have to ask themselves

11:30do they want to be part of this technology change or not?

11:33Or will we, as Europe, let China have the last say?

11:39So what's gone wrong in Germany?

11:41Are the EVs too costly? Are the models not right?

11:44Is the infrastructure lacking? Energy prices too high?

11:47Has political flip-flopping put buyers off?

11:50What can cash-strapped Germany do to emulate Norway's successful policies?

12:08And that could end up costing the German auto industry even more jobs in the long run.

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