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Customer LoginsGerman government and OEMs agree EV and PHEV subsidy programme
The German government has finalised the details of its long-awaited subsidy and incentive programme with a total of EUR1.2 billion being committed to supporting the sales of EVs and PHEVs in Germany.
IHS Automotive Perspective
- Significance: The German government has announced the long-discussed programme to encourage the purchase of electric vehicles and plug-in hybrids with a joint programme agreed with German OEMs to spend EUR600 million each on subsidies.
- Implications: The target is to encourage 500,000 EVs and PHEVs onto the roads of Germany by 2020, compared to the original target set by Chancellor Angela Merkel of 1 million units. EVs will get a subsidy of EUR4,000 while PHEVs will get a contribution of EUR3,000 as long as they cost less than EUR60,000.
- Outlook: At the moment the scheme is only open to cars manufactured by VW, Audi, Mercedes-Benz, and BMW which have all agreed to contribute to the subsidy fund, although it potentially could be opened up to other OEMs. The agreement has the potential to move the dial significantly on EV and PHEV sales in Europe's biggest car market but to what extent will be decided after proper analysis by IHS Automotive.
German government ministers yesterday (27 April) met with OEM representatives to finalise the long-awaited plan to subsidise the sale of electric vehicles (EVs) and plug-in hybrids (PHEVs) in the country.
The long-awaited incentives programme comprises EUR1.2 billion, with half the budget drawn from federal government funds and the other half being contributed by the OEMs. Buyers of full EVs will be given a contribution of EUR4,000, while PHEV purchases will be subsidised by EUR3,000. As things stand, the programme only applies to OEMs that have committed to contributing their share of the 50% to the fund. At the moment these companies include VW/Audi, BMW and Mercedes-Benz, although it is possible that more OEMs could be added to this list. The start date for the incentive programme is likely to be May 2016 and it will continue until the funding is exhausted, or until 2019 at the latest. The funding is structured so that only vehicles with a list price of less than EUR60,000 benefit.
In addition, the Federal Republic of Germany will invest a further EUR400 million between 2017 and 2020 in an effort to support the subsidy programme. This will include a further EUR300 million invested by the government in new public fast and standardised charging networks. This money will be divided into EUR200 million for fast charging networks, with a target of 5,000 new stations being introduced, and EUR100 million spent on standard charging networks, with 15,000 new stations being added. In addition, the government will spend EUR100 million on meeting a target of 20% of government vehicles being powered by alternative powertrains in the future.
Outlook and implications
The idea of the German government incentivising the sales of alternative powertrain vehicles has been on the agenda since 2010 when German chancellor Angela Merkel made an election pledge to have 1 million EVs on the road by 2020. Given the technocratic nature of the country, the progressive nature of environmental politics and the high net wealth of German consumers, it would appear to be an ideal candidate to lead the way in terms of encouraging the purchase of EVs. This is especially the case when one also considers how at the forefront of EV development German OEMs have been with models like the BMW i3 and the e-Golf, while the German premium OEMs are launching a major PHEV model assault. Mercedes-Benz is in the process of rolling out 10 new PHEVs by 2017 and BMW also undertaking a high number of new launches. However, it appears that the 1-million-unit target has been quietly dropped with a target of 500,000 units now stated as the target by the end of the decade. This compares to the figure of around 30,000 electric vehicles that are currently on Germany's roads. To put it in a wider context, just over 161,000 alternative powertrain vehicles (EVs and PHEVs) were sold in Western Europe last year. The German subsidy has the ability to move the dial significantly on alternative powertrain vehicle sales in Europe's biggest market over the coming months and years, although to what extent shall be determined by IHS Automotive after proper analysis of the scheme and its implications.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.