Automakers to fund 40% of proposed German EV incentive

In order to achieve its goal of at least one million electric vehicles (EV) on the country’s roads by 2020, the German Government may approve new incentives, which would see the auto manufacturers in the country provide roughly 40% of the costs involved. Through the incentive plan, which would start on 1 July 20106 and is expected to run until the end of 2020, personal EV buyers would have access to €5,000 in incentives, and commercial buyers would have access to €3,000 in incentives per EV purchased. The plan calls for a reported €1.3 billion in funding, which would be partly supplied by German automakers.

Germany may be on the verge of turning its talk about electric-car incentives into action.

The European nation with one of the world's most robust auto industries has no programs to subsidize the purchase of new electric cars at present, but discussions appear to have gotten more serious over the past few months.

A new proposal would allow German electric-car buyers to get up to 5,000 euros ($5,500) in rebates.

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And automakers would shoulder 40 percent of the cost of that rebate program, according to Reuters.

In addition to incentives for individual buyers, businesses would reportedly get 3,000 euros ($3,280) for each electric car they press into service.

If approved, the program would last until 2020, with incentives decreasing by 500 euros ($546) per year until the termination date.

2016 BMW i3

The proposed incentive plan was created by the environment, transport, and economy ministries, but it still needs the approval of the finance ministry.

The finance ministry—which claims to have been left out of the initial negotiations—is reportedly concerned about whether the plan's 1.3 billion-euro ($1.4 billion) price tag will affect the national budget.

Electric-car incentives have worked well in other countries, but Germany has been hesitant to adopt them.

ALSO SEE: China To Phase Out Electric-Car Subsidies By 2021, Let 'Market Decide'

Discussion of incentives goes as far back as 2014, when Chancellor Angela Merkel proposed adding tax incentives and cash rebates to help boost electric-car sales.

And last month, Economy Minister Sigmar Gabriel proposed committing 2 billion euros ($2.1 billion) to projects that would encourage electric-car adoption.

Those were understood to have included incentives, expansion of charging infrastructure, and a program to get government offices to use more electric cars.

2016 Volkswagen e-Golf

Germany has a goal of putting 1 million electric cars on its roads by 2020, and that will require a massive increase in sales.

Interestingly, the head of one of Germany's biggest carmakers doesn't find the goal unrealistic, but also expresses little confidence in the subsidies that could help generate sales for his company.

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In an interview with a German newspaper, Daimler CEO Dieter Zetsche recently called subsidies a "bridging function" that won't create stable demand for electric cars.

He applauded Germany's 1-million-car goal, though, and said he was confident advances in battery technology will soon broaden the appeal of electric cars.

[hat tip: Brian Henderson]

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