Why are so Many Germans Selling their Electric Cars to Denmark?

Introduction

The Electric Vehicle (EV) landscape has been undergoing a significant shift, with Germany, a renowned automotive powerhouse, taking a leading role in this transformation. Yet, an intriguing trend has arisen, with a steady stream of German EVs finding new homes in Denmark. A deep dive into the data uncovers the extent of this phenomenon.

In the first part of 2022, Denmark's market for new EVs was active, with thousands of cars sold. However, the used EV market outpaced it, with a notably higher number of units changing hands. In a year-on-year comparison, Denmark's used EV market saw a substantial increase in 2022, an indication of the growing appetite for pre-owned electric cars in the country.

The case of the Tesla Model 3 provides a telling example. Despite its popularity among EV aficionados, the number of new units sold in the first half of 2022 was relatively small. On the other hand, used Model 3s were a hot commodity, with thousands changing ownership, many of which were imported.

So, what's driving this surge in the used EV market? Three key factors seem to be at play here:

1. The Impact of fluctuations on the European Market
2. Legal availability to export an EV after just 6 months of usage In Germany
3. The sustainable life approach of Scandinavian countries, and specifically Danes.

The interplay of these factors has led to a unique market scenario in Denmark, characterized by a remarkable tilt towards used EVs. However, what are the underlying reasons for Germans selling their electric vehicles to Denmark?

The Current State of the German Electric Vehicle Market

A Decade of Electric Car Growth

Germany has long been a driving force behind the electric vehicle (EV) revolution. Indeed, over the past ten years, the German EV market has drastically transformed. By the end of 2022, EVs had carved out a substantial portion of the market, indicative of a remarkable growth trajectory. This period has been characterized by substantial technological advancements, evolving consumer preferences, and an intensified focus on sustainability.

The German EV market remains a dynamic space in 2023. According to the German Association of the Automotive Industry (VDA), sales of purely battery-electric passenger vehicles (BEVs) are set to experience an uptick, hitting several hundred thousand units.

The growth of the German EV market is underpinned by massive investments by the automotive industry in research, development, electromobility, battery technology, and digitization.

A Closer Look at Electric Car Policies and Incentives in Germany

German's government has been proactive in setting ambitious goals and implementing robust policies to foster the growth of the EV market.

To realize this goal, the Federal Government has implemented a package of measures, including a billion euros of investment, focusing on temporary purchase incentives, the expansion of charging infrastructure, and the procurement of electric vehicles by public authorities.

The Federal Government has also allocated significant resources to expand the charging infrastructure, with specific budgets earmarked for rapid and normal charging stations. It aims to have at least 20% of its vehicle fleet consist of electric vehicles and has made employee charging at workplaces a non-taxable benefit.

The Danish Electric Vehicle Market: An Insightful Overview

The current state of the Danish EV Market

Like Germany, Denmark has shown a strong commitment to sustainable transportation, with EVs playing a crucial role. The market has seen a surge in used EV sales, particularly from imported cars, underlining the Danes' pragmatic approach toward sustainable mobility.

Incentivizing EV Adoption: Danish Public Policies and Benefits

Denmark has enacted various policies to encourage the use of EVs, fostering a conducive environment for their adoption. Here are some of them:

1. Tax benefits on registration for zero-emission and low-emission vehicles.
2. Hydrogen-powered and fuel-cell electric vehicles were exempt from registration tax until the end of 2021, furthering the appeal of these green alternatives.
3. Tax benefits based on CO2 emissions.
4. Zero-emission cars attract lower rates. This tax structure aligns with the country's broader environmental goals and acts as an additional incentive for EV ownership.
5. Advantages offered for leasing vehicles with zero or low emissions.
6. Exemptions granted on fees for public parking.

Denmark has also acknowledged the importance of a robust charging infrastructure in encouraging EV adoption. Building regulations now require the installation of charging stations in both existing and new buildings with parking spaces.

Why Germans are Selling their Electric Vehicles to Denmark

Many factors are at play and then directly influencing the trend of selling electric cars to Denmark, such as:

1. Tax and subsidy differentials. The German government's aggressive subsidies for new EVs and Denmark's favorable tax regime for used EVs create a lucrative opportunity for Germans to sell their slightly used EVs to Denmark.
2. Differences in depreciation rates and resale values of EVs. EVs typically depreciate faster than their internal combustion, which make used EVs a more cost-effective option.
3. Better EV infrastructure in Denmark. For instance, the requirement for charging stations in new and existing buildings with parking spaces.
4. Consumer preferences: Danes are inclined towards used EVs due to the potential long-term savings.

Implications for the German and Danish Electric Vehicle Markets

Impact on the German EV Market

The exodus of used EVs from Germany to Denmark could potentially disrupt the German used car market. With a considerable number of EVs being sold abroad after six months, there may be a scarcity of used EVs in the domestic market, leading to a potential increase in their prices.

This trend might also affect new EV sales as the appeal of new EVs in Germany is partly due to the generous subsidies and the prospect of resale after a short period. If policies change or if the demand for used EVs in Denmark decreases, the sales of new EVs in Germany might be impacted.

Impact on the Danish EV Market

For Denmark, the influx of used EVs from Germany has significantly boosted the domestic used car market. Consumers have more options to choose from, and the lower prices due to competition make EVs more accessible to a broader demographic.

However, this trend could potentially hinder the sales of new EVs in Denmark. With a plentiful supply of cheaper, used EVs, Danish consumers might be less inclined to buy new ones, affecting local dealers and manufacturers.

Conclusion: EV Selling from Germany to Denmark

The intricate dance of electric vehicles between Germany and Denmark is a captivating narrative of policy, economics, and consumer behavior. Germans, spurred by hefty subsidies, are buying new electric vehicles and, after a six-month period, selling them off to the Danish market, where used EVs are in high demand due to favorable taxation and high resale value.

While this has led to a booming used EV market in Denmark, it has also raised questions about the balance in the new and used EV markets in both countries. Policy revisions may be on the horizon, as both Germany and Denmark need to ensure sustainable growth of their EV markets without over-reliance on cross-border sales.

As we look to the future, this trend might continue, subject to economic incentives and market dynamics. However, one thing is clear - the shift towards electric mobility in both Germany and Denmark is here to stay.

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FAQ

1. Why are Germans selling their EVs to Denmark?

For now, Germans are selling their electric vehicles (EVs) to Denmark primarily due to financial incentives. The German government offers substantial subsidies on new EVs, which lowers their initial purchase cost. After owning these vehicles for six months and driving them for 6000km (or even less if the car has 6000km when delivered to the buyer), Germans can then sell these cars at a profit in Denmark, where used EVs are in high demand due to favorable taxation and resale value.

2. What is causing the electric vehicle exodus from Germany to Denmark?

The main driver of this trend is the difference in electric vehicle policies between the two countries. In Germany, generous subsidies make new EVs more affordable. Meanwhile, in Denmark, high registration taxes on new cars and lower taxes on used cars create a strong demand for used EVs. These combined factors incentivize Germans to sell their barely used EVs to Denmark.

3. How do taxes and subsidies impact the EV trade between Germany and Denmark?

Taxes and subsidies play a crucial role in the EV trade between these countries. In Germany, substantial subsidies lower the initial cost of new EVs. In Denmark, high registration taxes on new cars make used cars (including EVs) more appealing. This discrepancy between the countries' policies creates a unique market dynamic, where it's profitable for Germans to sell their new EVs to Denmark after a short period of ownership.