Germany is set to launch a new incentive scheme worth about 1 billion euros to get more consumers buying electric cars as it struggles to meet a target of bringing 1 million of them onto its roads by the end of the decade.
The costs of the incentives, similar to those already established in some other European countries, are to be shared equally between the government and automakers with a view to selling an additional 400,000 electric cars, Transport Minister Alexander Dobrindt said on Wednesday.
Critics say higher electricity generation to charge battery cars will increase carbon dioxide emissions.
Currently Germany, the biggest car market in Europe, has only about 50,000 purely battery-powered vehicles and plug-in hybrids among the 45 million cars using its roads.
Under the plans, agreed early on Wednesday between government ministers and representatives of Volkswagen, Daimler and BMW, electric car buyers will get a €4,000 discount while buyers of plug-in hybrid vehicles will get a discount of €3,000.
“With this, I believe we will be able to give a boost to quickly move the number of vehicles (sales) to a considerable level,” Finance Minister Wolfgang Schäuble said.
The programme includes €300 million of spending on charging stations and could start as early as May, Schäuble said, adding that the government was considering further steps like tax incentives to make electric cars even more attractive.
“It’s true that the government may have left carmakers with too much wiggle room on emissions and industry certainly pushed things to a limit there,” Bankhaus Metzler analyst Juergen Pieper said. “But the decision to kick-start demand for EVs is right, other countries are doing this too for good reasons.”
IG Metall, Germany’s biggest trade union, said the decision should help secure jobs. “This step was urgently needed,” said the head of the union, Joerg Hofmann.
The car industry has repeatedly urged Germany to help boost demand for electric cars.
But lawmakers within Chancellor Angela Merkel’s Christian Democrats have criticised the idea of subsidising private car sales, as have environmental and taxpayers’ lobbies.
They say the government should instead use the money to fund the electrification of taxi and car-sharing fleets and invest in public transport.
“The incentive for electric cars is a big mistake,” Clemens Fuest, head of the Munich-based Ifo economic institute which surveys business morale, told Reuters, noting that funds would be better spent on promoting new technologies as higher electricity generation to charge battery cars will increase carbon dioxide emissions.
While the Volkswagen emissions scandal has highlighted Europe’s heavy reliance on diesel cars, other countries in Europe already have incentive schemes in place to get more consumers to buy electric vehicles, including Norway, the Netherlands, France and the UK.
“In countries where the government is providing an impetus, electric mobility is growing more quickly,” Matthias Wissmann, head of Germany’s VDA auto industry lobby said.
BMW, Mercedes-Benz and VW’s Audi – the world’s largest producers of luxury cars – rank only 12th, 14th and 22nd in terms of annual sales of electric and hybrid vehicles, trailing leaders Toyota, Honda, Lexus and Nissan, according to figures compiled by LMC Automotive.
But the premium car makers will not benefit from the new sales incentives because cars with a net price tag of more than €60,000 are not eligible, Schäuble said.
In the future, electric car drivers in Germany will benefit from special privileges such as reduced parking fees.
This is thanks to the country's new electro-mobility law, which took effect on 12 June. So far, German law did not have any framework for providing extra benefits to electric vehicles on public roads. The new Electromobility Law (EmoG) is intended to change this by applying a number of changes:
- Special parking spaces at charging stations are reserved for electric cars in public places.
- Parking fees are either reduced or eliminated for these vehicles.
- Exempting electric vehicles from certain access limitations, such as due to noise or emissions?.
At EU level, the Electrification of transport (electromobility) has been identified as a priority in the EU's research programme, Horizon 2020.
After several failed attempts, the plugs on electric cars are finally set to be harmonised at EU level, removing an important barrier to the adoption of electric vehicles by consumers who feared they would be unable to recharge their cars after they cross the border.
The EU is also supporting a Europe-wide electromobility initiative, Green eMotion, worth €41.8 million, in partnership with forty-two partners from industry, utilities, electric car manufacturers, municipalities, universities and technology and research institutions.