Germany May See Electrified Vehicle Incentives Coming Soon

Germany may be seeing 1.2 billion euros ($1.35 billion) devoted to subsidies to revive sluggish plug-in electrified vehicle sales in Europe’s largest automotive market.

Germany’s finance ministry has proposed subsidies with the government and automakers paying the bill, according to three people familiar with the matter. The proposal was made just prior to senior government officials and representatives from the auto industry meeting Tuesday with Chancellor Angela Merkel. That discussion will focus on incentives for electric vehicle purchases, and government funds to build a national network of charging stations.

Incentives would be sweeter for battery electric vehicles, which could be eligible for 5,000 euros ($5,638) in subsidies from the government and automakers from 2016 to summer 2018. Buyers of plug-in hybrid electric vehicles would receive 3,000 euros ($3,382) during that time period. The subsidies would then be reduced to 3,000 euros for battery electric vehicles and 2,000 euros ($2,254) for plug-in hybrids, according to the sources.

Criticism of government incentives benefiting wealthy consumers will also be taken seriously. EVs over a 60,000 euro ($67,639) net sales price will not be eligible for the subsidy, which is a concession to critics in the German government who are concerned over providing incentives to wealthy car buyers, a second person familiar with the matter said.

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Funding will be limited to 1.2 billion euros on a first-come-first-served basis, one source said. The finance ministry also proposed offering an addition 300 million euros ($338.2 million) in incentives to set up charging stations for the EVs, the source said. The German government has declined to comment on incentives for electric vehicle sales or charging station installations.

German government officials have been in conversations with automakers on how to improve EV sales to meet national emissions targets. Merkel aims to have one million EVs on Germany’s roads by 2020. Auto industry executives have consistently stated that they won’t be able to meet this goal unless the government provides cash and other incentives for consumers. They argue that other countries where their governments have provided generous incentives including tax breaks have seen strong sales of EVs.

Wall Street Journal