A employee inspects a Volkswagen e-Golf electric automobile trunk fitting in a light tunnel during quality checks at the Volkswagen AG factory in Dresden, Germany, on Friday, May 29, 2020. Photographer: Krisztian Bocsi/Bloomberg
BERLIN: Germany is set to start a major subsidy programme for electric vehicles (EVs) worth €3bil (US$3.5bil), renewing efforts to push sales and support one of its key industries.
The fresh round of funding, first outlined in October, is enough for about 800,000 cars, according to Environment Minister Carsten Schneider.
The programme targets low-to middle income households and is set to benefit the likes of Volkswagen AG and Stellantis NV that are rolling out a broader range of affordable vehicles.
The government will provide subsidies through 2029 of between €1,500 and €6,000 depending on the vehicle and a family’s size and earnings, Schneider told Bild newspaper last Friday.
A news conference planned for later in the day presenting details of the mechanism was postponed to today to allow final adjustments, the government said in an email.
Electric-car sales have fluctuated wildly in Germany, recovering last year after a steep decline in 2024 when sales slumped by 27% in Europe’s biggest single market for EVs.
The reversal, following the removal of subsidies by the previous government to plug budget holes, revealed the dependency on handouts for EV sales.
Germany has missed several times on government targets for putting EVs on the nation’s roads, though prospects for broader uptake are improving.
Manufacturers have started deliveries of a range of budget-friendly vehicles to boost sales this year. They includce Renault SA’s R5 E-Tech and VW’s compact ID. Polo, priced at around €25,000.
Europe’s carmakers are facing increasing pressure from imports of affordable EVs made in China by the likes of BYD Co.
In the United Kingdom, the biggest European market for Chinese-made EVs, grants introduced last year effectively exclude battery vehicles from China, mandating environmental standards including low carbon emissions from the battery and assembly process.
France’s so-called social leasing programme includes similar stipulations.
For Germany, exact details on exemptions to the subsidy aren’t clear yet.
Applications can be submitted retroactively to Jan 1, 2026 and an online portal to handle them is expected to be launched in May, Bild said.
“It’s a boost for our domestic auto industry,” Schneider said.
Chancellor Friedrich Merz’s ruling coalition of his conservatives and Schneider’s Social Democrats unveiled the programme in October, part of a broader effort to support the nation’s carmakers.
Merz was one of the driving forces behind a campaign to force the European Union to pull back from an effective ban on combustion engines and give carmakers more flexibility in the transition to less-polluting transport.
His government also extended an auto-tax exemption for EVs through Dec 31, 2035, which the finance ministry says is expected to cost about €600mil in lost revenue through 2029. — Bloomberg
