Financial incentives are being used by many countries around the globe that want to encourage the use of electric vehicles and reduce carbon emissions from transport. These incentives are considered to be one of the key tools that are used by governments aiming to increase the number of electric cars on their roads, but in most cases, they have done little to help countries meet their EV sales targets.
Germany, one of the world’s largest automobile markets, is one of those countries that has set an ambitious EV goal, but is still far from achieving it. EV sales in Germany have been pretty slow over the past few years, and only 50,000 of the total of 45 million cars on its roads today are all-electric or plug-in hybrid.
Now, in a bid to make electric cars more appealing to consumers and to encourage as many drivers as possible switch to green vehicles, Germany is set to introduce a new, more comprehensive incentive program.
Trying to Put One Million Electric Car on its Roads
After realizing that, if EV sales keep their current pace, the goal of putting one million electric cars on the road by 2020 will be very difficult to achieve, the German government has decided to ramp up incentives.
Government officials have announced that funding for a new incentive program has been approved, awarding direct subsidies to consumers who will be purchasing either an all-electric vehicle or a hybrid.
The program will cost the government 1.2 billion euros ($1.4 billion), and it is expected to result in 400,000 EV sales.
Those who buy a pure electric car will get 4,000 euros, which is the equivalent of around $4,500, whereas plug-in hybrid buyers will receive 3,000 euros ($3,400). There is a significant restriction to this program, though, as cars that have a price tag of over 60,000 euros ($68,000), will not be eligible for incentives. Also, the government says that it plans to start reducing the incentives in a couple of years.
“With this, I believe we will be able to give a boost to quickly move the number of vehicles [sales] to a considerable level,” Finance Minister Wolfgang Schaeuble said.
Investing in Infrastructure
A significant portion of the amount designated for subsidies will be spent to improve the country’s charging infrastructure. Schaeuble said that 300 million euros, or about $340 million, will go towards the construction and installation of charging stations, which is expected to start in a few weeks.
The existing charging infrastructure in Germany cannot support a larger number of electric vehicles, so investment in this department is necessary in order to allow a more widespread adoption.
In addition to the above-mentioned subsidies, the government might offer other types of incentives, such as tax breaks for owners of pure electric vehicles, who would be exempt from paying annual motor vehicle license taxes for ten years.
There is a strong opposition to these measures among some lawmakers in Germany, as well as activists trying to preserve taxpayers’ rights, arguing that it would be better if the government used that money to improve public transit systems instead.