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Germany announces EV incentives…but Tesla left out for now

Germany’s 1 billion euro EV scheme looks set to go ahead, with help from reluctant manufacturers.

Last week the German government unveiled a 1 billion euro incentive plan designed to increase the uptake of EVs.

Under the new measures, unveiled by Finance Minister Wolfgang Schaeuble on April 27, buyers of fully-electric vehicles can claim back up to 4,000 euros, while hybrid owners would be eligible for rebates of up to 3,000 euros. The three-year plan also includes making 100 million euros available to help local authorities purchase EVs, as well as 300 million euros to establish 15,000 charging stations across the country.

The scheme will officially begin in May, though is subject to approval from the parliament’s budgetary committee.
“The goal is to move forward as quickly as possible on electric vehicles,” Schaeuble told the conference. “With this, we are giving an impetus.”

50% of that impetus is being provided by carmakers themselves – although reluctantly if some reports are to be believed. Although the automotive industry has lobbied the government for support, it’s unlikely that they anticipated providing it themselves. Whilst the proposals were still under discussion, German newspaper Handelsblatt reported that:

Carmakers are expected to contribute €600 million to the plan, although they have so far only offered €200 million to €250 million

Yet, an agreement was reached following Chancellor Angela Merkel’s personal involvement in late-stage talks with German giants Volkswagen, Daimler (which also owns Mercedes-Benz) and BMW. As well as their contribution to the subsidy package, the manufacturers will increase their investment in R&D for battery and electrification technologies.

The push for incentives has been part of Merkel’s long-stated aim to get 1,000,000 electric vehicles on German roads by 2020 (frustratingly that total includes hybrids). Yet, with only around 50,000 on the streets so far, the target is a very long way off. As we reported in February, data from Kraftfahrt-Bundesamt (KBA) show that 12,363 fully electric vehicles were sold in 2015. Although that represents impressive percentage growth on 2014 – around 45% – full EVs still only represent 0.4% of the new car market and 0.02% of the total car market.

EVs would need to see a CAGR of around 140% to reach 1 million vehicles in the remaining 5 years.

The Catch

Another interesting stipulation is that the incentives only extend to cars costing 60,000 euros or less. As many have noted, that rules out the Tesla Model S – about the most competitive EV on the market in terms of range. Given that Tesla hasn’t yet opened orders for the Model X and that customers have around 18 months to wait before deliveries for the more affordable Model 3 begin, it offers German firms a healthy home-turf advantage in the short term.

They must use that time wisely. Although there is a formidable choice of hybrids, Germany offers comparatively few pure EVs – a fact which already has Daimler shareholders worried.

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