Car sales in pandemic-hit Luxembourg are at their lowest since 1996, yet purchases of e-cars have experienced a significant upswing in recent months, data from the national automobile traffic agency showed.

“40% of our car orders are for electric or plug-in hybrid vehicles,” said Eric Bailleul from Mercedes dealer Merbag said in an interview. Car dealer Arnold Kontz group noted the same trend, with its hybrid Jaguar and Land Rover models attracting more clients than ever.

While the share of electric cars only represented 1.8% of new registrations last year, the number rose to 4.6% in the first ten months of 2020. Over the past five years, the number of e-cars on Luxembourg’s roads has quadrupled, while hybrid engines – which derive their power from a combination of petrol and electricity – more than doubled.

The rollout of generous financial support from the state was one of the main drivers in boosting sales. Those buying a fully electric e-car are entitled to €8,000 in subsidies until the end of March.

For plug-in hybrid cars, which have a smaller battery additional to a combustion engine, the pay-out can go up to €2,500.

Another measure is a subsidy for installing chargers. The government now pays up to 50% of the cost, with the maximum capped at €1,200 for up to three connections, and at €1,650 for four or more.

The market might also see a further upswing with the arrival of a carbon tax next year. Starting on 1 January, the cost of filling up with petrol or diesel will go up by a few cents per litre.

The growing popularity of e-cars also has to do with a growing variety of available models. Currently, there are some 140 electric cars models on offer in Luxembourg, and the market expects some 45 new ones next year, the Fedamo dealer association estimates. Most are offered by Mercedes, Audi and BMW dealers, followed by Volvo and Porsche.

The recent trend might help Luxembourg reach its ecological goals. The country has committed to reducing emissions by 55% over the next decade – but also has the EU’s highest car ownership rate.

Febiac , a Luxembourg car association, forecasts overall car sales to drop by 15% this year after the country posted record numbers with 55,000 new car registrations last year.