Germany introduces EV subsidy

The German Government today announced it will kick off a €1 billion euro green-car subsidy scheme as soon as next month.

The scheme will deliver a €4000 rebate to anybody who buys a pure battery-electric car or €3000 to buyers of plug-in hybrid cars, and comes with a parallel program to open 400 electric-charging stations across Germany’s cities, towns and its network of autobahns.

In a blow to US electric carmaker, Tesla, the rebate scheme will not apply to cars priced above €60,000, while even the maximum level is €1000 short of the rebate pushed for by the VDIK, the German association of international carmakers.

“Of this (€1 billion), €300 will be used on the charging infrastructure between 2017 and 2020,” Germany’s Finance Minister, Wolfgang Schaeuble, said.

The Government won’t be contributing the full €1 billion, though, having used the current diesel crisis as leverage to winkle a 50:50 cash contribution out of the carmakers themselves.

It has also raised the possibility of larger tax incentives for the buyers of hydrogen fuel-cell, battery-electric and plug-in hybrid vehicles, in line with its current stepped levels of taxation today that are based on officially claimed CO2 figures. There is also a proposal for a quote of electrified cars on all public car fleets.

Electric cars will also be allowed to park free in cities and to utilize bus lanes even during peak-traffic times, though the Government’s proposal is likely to face opposition from the local governments that control city bylaws.

Unlike US electric-car subsidies, there is no limit (announced) to how many cars any brand can sell before the German subsidies are removed.

Germany has been criticized for years as a notable absentee from the European countries paying subsidies to green-car buyers, with The Netherlands, France, Denmark and, most outstandingly, Norway instead leading the way.

It has been saying since 2009 that it wanted a million electrified cars on German roads by 2020, but until now it has not outlined any kind of plan to encourage buyers away from traditional petrol- and diesel-powered passenger cars. Fewer than 21,000 electric cars were on German roads at the end of last year.

In its defence, the Berlin-based Government pointed out that it has funded €1.5 billion in electric-car research over the past six years.

While Tesla looks like the scheme’s biggest loser, the biggest winner will almost certainly be, with some irony, the Volkswagen Group. Volkswagen already builds and sells plug-in hybrid and battery-electric versions of the Up! and the Golf, while it has plug-in hybrid versions of both the Golf and the Passat.

The Tiguan SUV’s plug-in hybrid is less than six months away from production and both electric and plug-in hybrid versions of the next Polo are already confirmed.

Electric and plug-in hybrid models are also scattered through the rest of the Volkswagen Group’s brands, including Audi, Porsche, Seat and Skoda.

The timing of the announcement will be a boost to BMW, which is set to announce range upgrades for its slow-selling i3 electric car and which has plug-in hybrids like the 225xe and the 330e on its books. Renault and Nissan are also likely to be big winners.

The incoming scheme has been heavily politicised in Germany, especially in the wake of the Volkswagen Group’s Dieselgate crisis, which has been used to push through opposition to funding electric-car subsidies.

“The bitter irony (of the Volkswagen crisis) is that the fines it is facing could have been used to finance an entire electric-car program,” German Environment Minister Barbara Hendricks said.

Not everybody thinks Germany’s electric-car subsidy scheme will work, though, with Bergisch Gladbach Center of Automotive Research director, Stefan Bratzel, insisting it will deliver just a “flash in the pan”.

“The Government’s (electric-car sales) goal is quite simply not achievable,” he said. “There is a lot of euphoria, but no vision for a feasible economic model for electric cars (in Germany),” he argued.

The only ways electric cars would have lasting success in Germany, and the rest of the world, was through “battery autonomy, infrastructure and price,” he said.