Good news for Tesla corporate car owners in Germany, the "personal use" tax on corporate cars has dropped from 1% of the value of the car per month to 0.5% per month for BEVs and hybrids:
This tax is deducted from the salary of the user of the car:
- For a €100,000 Model S it was €1,000 per month - now €500 per month (savings of €6,000 per year)
- For a €50,000 Model 3 it would have been €500 per month, now €250 per month
This tax has to be paid by small business owners as well, where the corporate car is the family car. It also has to be paid by employees who use the car mostly for corporate purposes, such as sales or on site support staff. If the car sees any personal use the tax applies.
Corporate cars are also a popular noncash benefit for executives, high level and high value employees: a large chunk (over 50%) of luxury car sales in Germany are corporate cars.
This tax incentive is much more significant than the percentage suggests, because it directly increases the disposable income of salaried employees with corporate cars.
Duration of the new incentives is for new corporate cars delivered in 2019, 2020 and 2021. Should be a nice boost to Model 3 demand in Germany.
Company cars are widely in use in Germany for private as well your company trips to e.g. customer or office and a lower tax from 1% of the new car price down to .5% is indeed significant. Its by the way also taxed on the new car price regardless how old the car is the company provides to you and does not decrease . You also can use as an option a driving book that make the tax work in a different way.
It has been reported before but let me elaborate a little.
Company cars are not only used by executives but very much by mid Managers and e.g. normal consultants or Sales people as an incentive in an employee market that is completely dried up. Its a given for those roles and nothing you negotiate.
Historically its been an indirect subsidy for the German Automotive industry to support new car sales. Almost all businesses in Germany are using company cars which is good for the automotive industry and for the employee with no need to pay a car fully but just the 1% tax on the price tag per month. If you make the math thats almost like leasing a car but still in most cases its cheaper. You pay easily 300 - 500 € and if its every month now only half of it than its good money. In many cases you even get a gas card where the company pays all of the gas too.
With that rule the German Government made sure a lot of new cars on the mid and higher luxury level are sold to companies who sell them after a few years ago as used cars. Most new cars loose the highest value in the first years. As the amount of people buying brand new cars are limited you create a constant flow of used cars in the market with 2-4 years usage that are quickly absorbed.
The EV incentive has now been made more attractive to motivate company's to buy EVs and sell them after 2-4 years in order to build a larger fleet of used EVs that flow into the market for households that cannot afford a brand new EV.
This is a positive move and I am happy that our Government did that. They state they invested € 5,2 bn to support EVs but the industry did not deliver. The amount of EVs on the road in Germany is small with a market share of 6% from Tesla and 66% from German Auto makers like VW (eGolf) and BMW (i3) without having seen the real numbers I assume that they include all plug ins in their calculation though.
If you work for a company and you drive a lot you get in most cases an offer for a company car. EVs have been so far not been in that market because Tesla was and is the only one who provides an EV for long distance drives including a working SC net with a high density in Germany. The Leaf or i3 did not make the job and only a very few S or even X made it mainly to executives and some (criticized) politicians with a green mind.
Now as the 3 will hit the road in a few months we have an EV that is in an acceptable price range for companies and brings range as well as a working charging network. After 2-4 years most of this 3s will be sold into the second market and help to support the movement to EVs. Once the SR is delivered that movement will be even accelerated.
With no other EV in sight with the price point, range, charger network and efficiency of the 3, I expect the company car tax structure change the 3 to be a car for the masses with an almost monopoly in Germany.
The German Auto industry who creates a larger portion of the new car sale will suffer strongly now as a constant flow of new mid to mid/high level EVS will bring their car ICE business under pressure. This is the market of the 3 series, 5 series A4, A6 and so on. This are their cash cows. That will hurt very much unless they bring a car on the road that is a real competition to the 3 and this is something I just do not see in the next 2 years to happen.
Another kind of guaranteed revenue stream from the German automotive industry will dry up starting in 2019.
As I wrote in a article before
(...) I am today more concerned about the German Auto industry than ever (...)
