Germany’s expanding electric-vehicle market is putting pressure on a transport-financing model that relies heavily on taxes on gasoline and diesel. As more drivers switch away from fossil fuels, policymakers face the prospect of declining revenue for roads and other transport infrastructure, according to DW.
Jens Boysen-Hogrefe, a tax and transportation expert at the Kiel Institute for the World Economy, said high fuel prices were accelerating a transition that had already been planned. He told DW that the government’s existing system of energy taxes, truck tolls and carbon charges is highly lucrative, but that the finance minister benefits far less when people drive electric cars.
Data cited by DW show that German revenue from the energy tax on diesel and gasoline fell from €37 billion in 2016 to €33 billion last year. A 2022 report by the scientific advisory committee to Germany’s Transport Ministry projected that energy-tax revenue could fall as low as €5 billion by 2050. The report said the fiscal consequences of the shift to electric vehicles had received too little attention and warned that future shortfalls would come alongside the costs of supporting the transition.
Electric cars remain exempt from Germany’s vehicle tax through 2035, while companies investing in electric vehicles continue to receive tax benefits. Direct purchase incentives worth several thousand euros per vehicle were abolished at the end of 2023. Boysen-Hogrefe said continued strong EV sales could increase fiscal pressure and warned that the government could not ignore the issue indefinitely.
Other countries are testing different approaches. The United Kingdom plans to introduce a mileage-based levy for electric cars and plug-in hybrids in April 2028, while New Zealand and Iceland use annual odometer checks to calculate fees. Switzerland plans a road-use charge from 2030, and Norway has restricted its VAT exemption for electric cars while introducing other charges.
In Germany, experts cited by DW have advocated a passenger-car toll based on distance and traffic. A University of Münster study listed such a toll as the preferred option, with a time-based vignette or higher motor-vehicle tax as alternatives if political resistance prevents a distance-based system.