Palmer proposes tax on petrol cars to boost EV sales in Germany

Former Green Party politician Boris Palmer suggests a controversial tax on petrol cars to accelerate the shift to electric vehicles and protect the future of Germany’s automotive industry.

The debate over combustion engines versus electric vehicles (EVs) remains highly divisive, with many still preferring traditional petrol or diesel cars for their sound, reliable range, and lower cost. However, EVs are seen as the more innovative and environmentally friendly option. Amid this ongoing debate, Boris Palmer, the former Green Party member and current mayor of Tübingen, has proposed a drastic measure to accelerate the transition to EVs and secure the future of Germany’s automotive industry.

In a commentary for the Frankfurter Allgemeine Zeitung (FAZ), Palmer suggests that the government should introduce a special tax on all newly registered petrol and diesel vehicles. The revenue from this tax would then be used to subsidize the cost of EVs, making them more affordable and attractive to consumers. Palmer believes this is necessary to increase the demand for EVs and ensure that Germany’s automotive industry remains competitive as the world shifts away from combustion engines.

Palmer’s warning: German auto industry at risk

Palmer bases his proposal on the concerning trend that many young people in Germany still prefer petrol or diesel cars over electric ones. Referring to conversations he has had with eighth-grade students in Tübingen, Palmer notes that only a small fraction of students expressed a preference for EVs. In a comprehensive school, only three out of about 80 students said they would choose an EV as their first car. Even in a higher academic track, only about 20 out of 100 students favored EVs.

Palmer argues that this lack of interest in EVs among young people poses an existential threat to Germany’s automotive industry and its suppliers, which still rely heavily on combustion engines. He warns that companies like Mercedes-Benz, VW, and others could face a “deadly trap” if they fail to make the transition to electric mobility. Palmer draws a parallel to companies like Nokia and Kodak, which faced decline after clinging to outdated technologies.

Proposed solution: Tax petrol cars to make EVs cheaper

Palmer’s proposal is designed to address the issue of weak demand for EVs by making petrol and diesel vehicles more expensive through a special registration tax. The revenue from this tax would be used to fund subsidies for EVs, effectively reducing the price gap between the two types of vehicles. Palmer suggests that the price difference of at least €6,000 between petrol cars and EVs needs to be closed to stimulate the market. He estimates that this would require a registration tax of around €2,000 per vehicle. As the market share of EVs grows, Palmer argues, the tax on petrol and diesel vehicles should be increased accordingly.

This proposal, though controversial, is not entirely new. In 2022, automotive expert Ferdinand Dudenhöffer made a similar suggestion, and the German Federal Environment Agency has also called for higher taxes on vehicles with high emissions.

Saving a key industry and meeting climate goals

Palmer emphasizes that his proposal is not just about promoting EVs but also about saving a crucial industry in Germany and meeting the country’s climate goals. He argues that by making EVs more affordable and increasing their market share, Germany can both preserve its automotive industry and reduce carbon emissions from transport.

The proposal has sparked debate, particularly among advocates of combustion engines, who see it as an attack on their preferred vehicles. However, Palmer insists that the transition to electric mobility is essential if Germany is to remain a global leader in the automotive industry.