German Automakers (Unsuccessfully So Far) Push For Electric Car Incentives In Germany

2 years ago by Eric Loveday 13

2016 Volkswagen e-Golf

2016 Volkswagen e-Golf

BMW i3

BMW i3

Over in Germany, some of the country’s leading automakers recently met with Chancellor Angela Merkel to discuss implementation of electric car incentives in Germany.

The talks ended without a deal being worked out, but at least there’s a strong push for incentives there now.

As Reuters reports:

“Germany needs incentives to boost demand for electric cars if it is to retain its leading edge as an automotive market, industry bosses said on Wednesday, a day after a high-level meeting with Chancellor  ended without a deal on subsidies.”

“Merkel summoned auto bosses to discuss promoting electric and hybrid cars following increased political pressures in the wake of Volkswagen’s admission that it cheated U.S. emissions tests for diesel-powered cars.”

But discussions are still ongoing and it seems some incentive will be determined soon..

Here’s the plan government’s latest proposition, according to Reuters:

“The heads of the three parties in Merkel’s ruling coalition have considered introducing a subsidy worth up to 5,000 euros ($5,500) for electric car buyers. But Finance Minister Wolfgang Schaeuble, a senior member of Merkel’s centre-right party, has spoken against such a move.”

“Under the proposal being discussed, carmakers may contribute between 1,500 and 2,000 euros of the incentive, which would be paid into a common fund, the weekly news magazine Der Spiegel reported, without citing sources.”

Unsurprisingly, as we pointed out ahead of the meeting, having the maker of an OEM contribute to a rebate on that same plug-in vehicle to make it less expensive makes almost no sense.  Actually it makes no sense at all.

As to where we go from here, Sigmar Gabriel (German economics minister) said the automotive bosses and government would continue to have talks to “find a solution on incentives by March”.

Source: Reuters

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13 responses to "German Automakers (Unsuccessfully So Far) Push For Electric Car Incentives In Germany"

  1. vadik says:

    I do not see why it does not make sense to force companies to collaborate.. Of course they will not want to, but then the government will just impose a quota and wash the hands.

  2. s says:

    Hm. I think having the automakers contribute to a common fund can make some sense. It’s like the ZEV credits and tax incentive combined into one. Say you are forced to contribute 2000 euro for 5% of the cars you sell. If you don’t sell 5% electric cars, you are in effect paying someone to buy your competitor’s car. If you sell 5% electric cars, you are just giving a discount to your customers, and the government is matching that discount. If you manage to sell more, it’s your competitors plus the government paying for the discount.

    1. Cavaron says:

      +1 exactly what I was thinking!

  3. pjwood1 says:

    Someone’s in a paper bag, and needs directions.

  4. Mike I says:

    Give me a break. If they wanted to provide an incentive of 5,000 Euros on 5% of their sales, all they have to do is raise prices on all their other cars by 263 Euros. Is anyone going to notice that? No. They just don’t want to do it.

  5. Michael Will says:

    The contribution into the fund should come from gasoline tax.

    1. zzzzzzzzzz says:

      They already have huge gasoline tax and residential electricity prices close to 0.30 EUR due shifting to expensive renewable energy sources, and plenty of other bills to pay. Nobody wants to tax economy to the ground, as afterwards you would have nobody paying for your “free goodies”.

  6. Get Real says:

    Never ceases to amaze me how difficult the Germans are making this transition. Seems like a no-brainer since Germany has to import all its oil and is leading the worl in transitioning to Renewable electricity.

    IMO the German OEMs have way to much political influence and are mostly very conservative at transitioning to EVs since Tesla has so far spanked them on technology and implementation on the high-end.

  7. Jernej says:

    @Get Real

    Wolfgang Schaeuble is one of the chief architects of strong german economy. Germans already created global market for PVs by their heavy subsidies. Germans should do nothing and wait for americans/japanese/chinese/french to foot the bill.

  8. wavelet says:

    Like I commented in the original story, the contributions would be essentially a tax on all car production (ICE) whivch would be pooled, and used to provide some of the rebate, so it does make sense.

  9. Phr3d says:

    Hoping (ever) that a tax relief, as done many else-wheres is the solution, i.e. no X-taxes for the life of the vehicle. that eliminates X-pollution for every city-centric vehicle for as long as All owners can keep it alive.
    Which taxes is key, but damned-near Anything is an improvement for the cities in question.

  10. Joe says:

    I think in Germany, direct buying benefits/discounts will have close to no impact.
    The reason: about 60-70% (some even say 80%+) of new cars are purchased by corporate buyers. Especially the bigger (more polluting cars) are almost exclusively bought as company / leasing cars.
    Companies will almost surely won’t qualify for the benefits/discounts and that reduces the impact of the measure. No, it would be far more effective to give the purchasing company the right to amortise the new car quicker than an ICE car and at the same time, to increase the tax rate on the top models and use that money to subsidise infrastructure.

    But that still skates around the main issue: getting (German) automakers to actually want to sell EVs. And therein lies the rub: none of the automakers have the production capacity, nor the profit margin incentive to actually want to sell loads of electric vehicles. Think about it: an automaker needs to pay dividends on their shares and the technology on ICEs is amortised, hence has much lower per piece production costs than EVs. Especially if cou factor in that the big three German firms are lagging behind in EV tech.
    This factor heavily impacts profitability and raises an incentive for automakers to continue with the current ICE focus. Driving up demand through purchase incentives is only going to impact production for the next generation models. In the meantime, current generation EV buyers are just going to be offended by the waiting lists and the continually high prices (high demand = no incentive for price drops, economies of scale only kick off for the next generation again). And probably they will then default to buy ICEs, most likely dirty Diesels.

    No, it would help to spend the money that would go into the incentive schemes on infrastructure and on corporate purchase benefits. And then as an incentive to automakers, maybe reduce the amout of tax they pay on earnings from EVs for a period of 5 years. Which is in effect only fair, since the government is also subsidising ICE tech anyway.

    The biggest environmental impact would actually come from a different measure altogether: introducing a speed limit of 140km/h on the Autobahn, and enforce it. That would reduce the need for “big” cars to have gigantic engines, since no car needs more than 2L to achieve 140km/h. That reduces the overall CO2 levels very effectively and can also lead to EVs becoming more of a decent choice again, since they have longer range when operating up to that type of speed.
    As I see it, if we’re talking about levelling the playing field for EVs, increasing demand through buyer incentives won’t have much impact in Germany. That is very different in other markets, though, where many more private people buy cars directly, e.g. Norway, USA etc.
    just my 2 cents…