The Flemish government has (re-)installed a premium of €5 000 to purchase a new battery electric vehicle (BEV). For a second-hand one, there’s a subsidy of €3 000.

There’s a significant restriction, however: the purchasing price of the BEV has to be less than €40 000, severely reducing the choice of electric cars on offer. Nevertheless, the criticism about the measure is growing.

The individual buyer

Company car sales severely dominate the car market in Belgium and even more so in Flanders.  More than two-thirds of all sales are company cars, and most electrified vehicles can be found in this category. With the premium, the Flemish government wants to activate individual car buyers who were, until now, very reluctant to transition into electric mobility.

The biggest reason for this reluctance was the price of a BEV. As car manufacturers seem to have wholly neglected the lower end of the car market (especially the European manufacturers), also because a battery is expensive, many people found that an electric car was way above their budget.

The manufacturers tried to persuade people, talking a lot about the TCO or the total cost of ownership. However, many people are still scared by an electric car’s significantly higher purchase price.

The same government abolished a former premium in the same order some years ago; now, the politicians have changed their policy again to convince the individual buyer and accelerate the electric transition.

5 000 or 3 000

The premium will amount to €5 000 in 2024 and decrease to €4 000 in 2025 and €3 000 in 2026. For second-hand buys, there will be a premium of €3 000 next year, decreasing to €2 500 in 2025 and €2 000 in 2026. In any case, the price of the car can’t be higher than €40 000, VAT included.

Sector satisfied

Importer and manufacturer federation Febiac is satisfied with the result. “Until now, the individual buyer wasn’t present yet on the market for electric cars,” says Febiac technical director Michel Martens. “The premium of the Belgian government won’t compensate the total additional cost of a BEV, but it will surely help to convince people.”

Martens also stresses that due to the high prices for gasoline or diesel, an electric car can already be cheaper after three years when one drives 20 000 km per year. Febiac is confident that the premium will finally convince many hesitant buyers to opt for electric.

In this battle for the low-cost BEV, the Chinese manufacturers will undoubtedly play a significant role. Recently, EU Commission president Ursula Von der Leyen warned against the ‘unfair competition’ of the Chinese. Still, in practice, such premiums will surely help the Chinese brands to get a stronger foothold in Europe.

A lot of criticism

Not all parties concerned are as enthusiastic as the car sector. “There’s a serious contradiction in this premium policy,” says KUleuven emeritus economy professor Stef Proost in De Standaard. “Electric cars are much cheaper to use than petrol ones. The Flemish government has no right to complain when the traffic congestion will increase again.”

“The Flemish government should better concentrate its efforts on lowering the pollution created by housing,” he adds. “The need for green investments is much higher there.”

The Christian union ACV notes that the money (all in all € 20 million) would better be spent on public transport, flexible transport, and sharing. The organization TreinTramBus points out that the money only goes to (electric) cars and not to Flemish public transport provider De Lijn. “The 20 million euro could have been spent on 100 electric buses, transporting many more people in their lifespan than 4 000 subsidized electric cars.”

The environmental organization BBL (Bond Beter Leefmilieu) fears that the subsidies are paid to people who don’t need them, not least the car-selling businesses that will use the subsidies to increase the prices of BEVs.

Another criticism is that the current subsidies will stimulate the import of Chinese cars as they are, at the moment, the more interesting buys in the category between 30 000 and 40 000 euros. The European manufacturers are now frenetically trying to close the gap in the lower end of the market, but it will still be 2024 or even 2025 before a small, affordable Citroën (ë-C3), Fiat (Panda), Renault (R5), or Volkswagen (ID.2) will appear in the showrooms.

Finally, UGent researcher Joannes Laveyne notes in De Standaard that the Flemish government has missed the opportunity to steer some things regarding electricity distribution. V2G (vehicle-to-grid) should be a condition for all new electric cars coming to the market, especially when they’re subsidized.