Germany Gets Giant €130 Billion EV-Incentivizing Stimulus Package
As the virus lockdown has obliterated new car sales around the globe, and many auto dealerships are only beginning to reopen, Germany has taken a drastic step in the right direction. With a new €130 billion stimulus initiative, Chancellor Angela Merkel and Finance Minister Olaf Scholz have signed off on the doubling down of electric vehicle incentives.
Despite the economic devastation caused by Coronavirus, many countries saw electric vehicles become their best selling cars for the first time. Across Europe, many saw the reduction in emissions as a game-changer, and voted with their wallets to join in on the EV revolution, despite the economic turmoil.
Now as governments plan how to reopen their economies and help their automotive sectors fledgling performance, the new frontier of clean energy seems an obvious godsend. In Germany, this new stimulus would double the government’s grant for buying an EV, by increasing the amount returned to customers, and the amount subsidized to producers.
Buyers of a new EV would get €6,000, which stack on top of the €3,000 subsidized to the automaker in the first place. That could easily represent a third of the cost of a new EV, considering the falling prices from economy-of-scale and heating up competition in the business.
At the same time, Germany has plans to roll out higher taxes on CO2 emitting vehicles starting 2021, a trend that has been ongoing for year now across Europe. To further add to the factors in support of EV adoption, four European automotive associations recently sent a letter to the EU parliament asking for a plan to pay people to scrap their old cars.
These ‘cash-for-clunker’ programs or scrappage deals have seen huge success at changing the makeup of roadways in the past. When the economy is rough and EVs are desperately trying to compete with traditional automotive, this perfect storm of incentives could see many change in their old ICE vehicles for new BEVs.
I’d be remiss if I didn’t mention how this looks for Tesla. The company has a new Gigafactory coming up especially quickly outside of Berlin. If all goes well, they could be poised to flood the European market with new affordable Model 3s and Model Ys on the coat-tails of these initiatives.