Germany to give €1bn subsidy to boost electric car sales

Germany will subsidise electric car purchases to give a jolt to sluggish growth in the sector and help meet national climate goals with zero-emission mobility, the government said Wednesday.

Car buyers will receive €4,000 ($4,500) when they choose a purely electric vehicle and €3,000 for a plug-in hybrid, with the cost shared 50-50 between the public purse and car makers.

The programme starting next month aims to help Germany approach its goal of putting one million electric cars on the road by 2020 – up from around 50,000 now out of Germany’s 45 million cars.

So far, German auto giants Volkswagen, Daimler and BMW have signed up to it, but the programme is open to all national and foreign brands.

The government has budgeted €600m for the purchase subsidies, which are expected to run until 2019 at the latest.

The money will be disbursed on a first come, first served basis for cars priced no higher than €60,000, said finance minister Wolfgang Schäuble.

“If you want one, buy it quickly,” he said at a Berlin press conference.

The government has also budgeted €300m to speed up building the infrastructure of electric car-charging stations in cities and on autobahn highway stops.

Another €100m would go toward purchasing electric cars for federal government fleets.

Overall, the €1bn government programme should subsidise 400,000 electric cars and boost the segment to the point where the e-car becomes “mass market capable”, said vice-chancellor and economy minister Sigmar Gabriel at the same press event.

Critics have asked why auto companies that already make billions in profits – and especially embattled VW, gripped by the global emissions cheating scandal – should benefit from public subsidies.

Gabriel said the programme, which follows similar schemes in Norway and the Netherlands, would also help future-proof Germany’s car sector in times of “the worldwide reinvention of individual mobility”.

German car makers are now marketing some 30 electric models, many of them plug-in hybrid versions that can switch between a conventional petrol engine and batteries.

On the market are a BMW electric-only car, as well as Volkswagen’s E-Golf and E-Up, several Daimler B-class models and a version of the Smart.

Audi plans to release an electric SUV in 2018, while luxury car maker Porsche has promised a “Mission E”.

VW CEO Matthias Mueller said the new scheme was in the interest of motorists and the auto industry.

“The future belongs to electro-mobility,” he said. “Together we are now laying the groundwork for this future to start more widely in Germany.”

Germany, Europe’s biggest economy, under its ambitious “energy transition” plans to largely switch from climate-harming carbon fuels to clean energy by the middle of the century.

It is phasing out nuclear power by 2022 and boosting wind, solar and other clean energy sources to meet 80 percent of its power needs by 2050.

Renewables such as wind, solar, water and biomass last year accounted for one third of electricity consumed in Germany.

However, the transport sector has been a laggard in Germany’s energy shift, with electric cars so far making up less than one percent of vehicles on German roads.