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Germany plugs in EV incentives

ID please: Volkswagen will be hoping to grab a slice of the sub-$A65,500 German EV market with its looming ID.3 hatchback.

$A213b German EV subsidies spark furore as ICE car-makers miss out on aid

11 Jun 2020

THE German automotive industry is furious that petrol and diesel vehicles will miss out on a $A213 billion economic stimulus package targeting electric vehicles (EVs) only.


Germany’s Federation for Motor Trades, which represents 40,000 automotive companies and 1.3 million workers, said combustion-engined vehicle manufacturers were being ignored, despite the vehicles making up more than 90 per cent of annual sales.


It also said there were $A24.5 billion worth of unsold new vehicles parked around Germany and that the car industry was “crisis ridden”.


The German government announced the stimulus package this week to boost the economy that has been ravaged by the pandemic and falling new-car sales.


Vehicle sales in Germany plunged by 61.1 per cent in April compared with the same month in 2019 as major manufacturers stopped production and buyers stayed away. 


Car dealerships opened in late April but the May sales were still down 49.5 per cent on the figures from last year.


The country was also hit by a record lull in total vehicle production over the first five months of the year, down to numbers not seen since 1975. 


The stimulus, designed to assist manufacturing during the COVID-19 pandemic, has also angered car-makers because the German government has reportedly ignored requests to reinstate a $A8.2 billion scrappage scheme that helped boost new-vehicle sales during the 2009 global financial crisis.


The $A213 billion stimulus includes a $A9820 subsidy for EVs and a temporary three-percentage point cut to Germany’s value-added tax, from 19 per cent to 16 per cent. It also earmarks $A4.1 billion to build more electric charging stations and battery-cell technology.


Under the stimulus plan, German fuel stations will be required to provide EV charging, boosting the number of outlets while pacifying consumers who may have overlooked EVs because of concerns over their range.


Germany’s public EV charging network grew by 10,000 charging spots last year, an increase of nearly 60 percent, to 27,730 spots. Fast-charging spots made up a share of about 14 percent. 


Electric car sales, which made up only 1.8 per cent of new passenger car registrations in Germany last year, will be boosted by a $A9820 incentive for buying an EV that costs below $A65,500.


Eligible cars include the BMW i3, Hyundai Ioniq and Kona, Kia E-Nero, Peugeot 208e, Renault Zoe and Tesla Model 3. 


Volkswagen will be hoping to snatch a slice of the action in this market when it launches its ID.3 EV later this year, hoping to capitalise on an expected positive buyer reaction to the subsidy. 


More expensive EVs such as the Tesla Model S and the Mercedes EQC are also eligible for subsidies, but not for the full amount.


EV sales in Germany have been rising with about 280,000 EVs and plug-in hybrids registered in the country. 


However their sales only accounted for 1.8 per cent of all vehicle deliveries in 2019 with some 110,000 battery EVs and plug-in hybrids sold that year.


Stimulating the market in 2020 is an EV subsidy that totals $A14,720 for eligible vehicles. 


Buyers of EVs already get a $A4910 discount from the manufacturer on vehicles costing less than $A65,500. 


In concert with the stimulus and its low-emission targets, Germany will overhaul its vehicle tax rates. 


As of January 2021, cars with emissions higher than 95 grams of CO2 per kilometre will face increased levies, although the exact amounts are yet to be finalised. 


The average emissions of a new car last year in Germany was 150.9g of CO2 per kilometre.


In Australia, tests in 2017 showed our figure to be 118g/km.

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