- The Schwarz Group halts the order of electric vehicles as company cars in Germany.
- The decision is based on the depreciation of electric cars in the used car market.
- In other countries, the Schwarz Group continues to support electric mobility and plans to expand its charging infrastructure.
The Schwarz Group, the company behind Lidl and Kaufland, is reversing its stance on electric mobility. Employees in Germany can no longer order electric vehicles as company cars. With more than 600,000 employees globally, the company has made a significant pivot by opting for combustion engine vehicles at a time when electric vehicles are heralded as the future.
A company spokesperson explained, “Due to volatility in the automotive market and changing regulatory frameworks, we have decided to pause new orders of fully electric vehicles.” This pragmatic approach highlights the financial challenges associated with electric vehicles in the current environment.
Economic Factors Behind the Decision
The rationale for this shift is rooted in economic considerations. Unlike many firms, the Schwarz Group purchases its company cars outright and later sells them as used vehicles. Therefore, value retention becomes critical for the company’s bottom line.
Electric vehicles (EVs) experience significant depreciation in the German used car market. Demand for pre-owned electric vehicles remains tepid, and many models become outdated in just three years due to advancements in range, charging time, and software capabilities.
Tax Advantages for Electric Vehicles
Despite the halt in orders, electric vehicles are typically seen as an attractive choice for company cars. Employees benefit from a considerable tax advantage; they are taxed only 0.25% of the car’s list price as a non-cash benefit. In contrast, traditional combustion engine vehicles are taxed at 1%.
For example, an electric vehicle valued at €60,000 incurs an additional monthly income tax of only €150, while a combustion engine vehicle would incur €600. However, this tax benefit does not extend to used vehicles, which discourages investment in electric models.
Sustainability Goals Despite the Shift
Despite the withdrawal from electric vehicle orders in Germany, the Schwarz Group emphasizes that this decision does not represent a retreat from its sustainability goals. The company remains committed to electric mobility in other European countries and is focusing on alternatives like job bicycles and company tickets.
Schwarz aims to align profitability with climate objectives, maintaining a global net-zero target by 2050. The expansion of its charging infrastructure remains a priority, with plans for 24,024 charging points across 6,973 locations by the end of the 2025 business year, which reflects a 245% increase over five years.
Comparative Approach of Other Companies
The case of the Schwarz Group is not unique. The Deutsche Bahn, also buying its fleet outright instead of leasing, continues to support the acquisition of electric vehicles for employees. Despite challenges related to lower residual values impacting overall economic viability, it assesses vehicles based on requirements, cost-efficiency, and sustainability.
In summary, while the Schwarz Group’s decision to suspend electric vehicle orders may seem like a step back, it is a strategic move reflecting current market realities. The company remains committed to its long-term vision of sustainability while navigating the complexities of the automotive landscape.
