German car sales grow in 2023, but EVs struggle

Last year, 2,84 million cars were sold in Germany, or 7,3% more than in 2022. Electrified vehicles, however, struggle to find buyers, primarily due to the disappearance of practically all incentives for buying them.

979 000 of the cars sold were simply gasoline engine powered, and that’s a 13% growth, while the pure electric cars only grew by 11%. Even diesel car sales increased by 3% last year, while the sales of plug-in hybrids collapsed (-52%).

The result is that only 18,4% of total sales in 2023 were electrified vehicles, compared to 17,7% in 2022. Compared to the (smaller) French market, we see that the market in the Hexagone grew more and that electrified vehicle sales represented 26% of the market over there.

No incentives anymore

The systematic disappearance of governmental incentives in Germany has hampered the sales of electrified vehicles. Since January 2023, there have been no subsidies for hybrid cars anymore; in September, the bonus for electric company cars disappeared.

To top it all off, Olav Scholz’s federal government abruptly cut all subsidies for EVs bought by individual buyers in December. The German government felt forced to do so because the federal constitutional court decided that it was unlawful to use money received from the EU for the consequences of the pandemic for other purposes.

To avoid a total collapse of EV sales, manufacturers like Volkswagen and Mercedes decided to pay the governmental bonus themselves for cars ordered in December. Nevertheless, the sales of electrified vehicles have plummeted: -39% in November and -58% in December.

No rosy future

2024 won’t be a good year for total sales in general and electric sales in particular, esteems market watcher Constantin Gall from EY. “Electric and hybrid cars won’t be the growth engine anymore like they did in the first years after the pandemic.”

“The government’s aim to put 15 million electrified vehicles on the street before 2030 has become an illusion now,” he added. There are just over 1 million electrified cars on German roads, and to reach the target, 90% of all car sales should be for electrified vehicles in the coming years.

“That’s unrealistic,” comments Gall. According to him, 2024 will be a year of great uncertainty for electromobility in Germany, and the Federation of Car Importers (VDIK) shares his view. It called on the government to reconsider its decision and reinstall an environmental bonus scheme.

Finally, the car industry sector federation VDA thinks that the balance for 2023 remains positive compared to the years before. However, the market is still far below the pre-Covid-19, which topped at 3,6 million annual sales in 2019.


Meanwhile, the German car industry finds itself wrestling with a dilemma. Nerved by the threatening ‘invasion’ of Chinese electric cars, the EU Commission is considering higher import taxes for Chinese products, which is already the case in the US.

The problem is that the more prominent German car manufacturers, especially the premium ones, all have significant interests in the Chinese market. In some segments, they’re still number one over there, and for some companies, it’s their single most important sales market.

On top of that, the German car industry, failing to jump on the electric bandwagon soon enough, is highly dependent on parts for their EVs, especially the batteries, from Chinese suppliers. So they can’t easily promote more stringent import rules for Chinese cars without cutting their own flesh.


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