A Blog by Jonathan Low


May 3, 2016

Germany Introduces Electric Car Subsidy - But Excludes Tesla

The most expensive models offered by German automakers like Mercedes, Porsche and Audi may also be excluded.

The reason is that the subsidy program was attacked as a giveaway to the rich so the German government put a price limit on which cars qualify - currently only those costing under 60,000 euros or @ $67,000. Which is still a hefty price tag for most people.

Germany and the EU are pushing hard to reduce emissions and increase the use of more environmentally efficient or sustainably alternative transportation options. Meeting their goals, as the following article explains, is going to be a challenge. JL

Neil Winton reports in Forbes:

Only cars priced under 60,000 euros ($67,900) will qualify.Currently there are a total of about 30,000 electric vehicles on German roads. Thanks to the new scheme, maybe a total of 500,000 electric cars would be on German roads by 2020. Tesla is excluded because its vehicles are too expensive to qualify. The new Model 3 would qualify when it finally gets to Germany.
Germany ‘s target of one million electric cars on its roads by 2020 stands no chance of being met, but news the government agreed to contribute 50% to a 1.2 billion euro ($1.4 billion) subsidy fund, should mean their sales might reach half that.
German car manufacturers will be the big winners from the scheme, criticised by local politicians for subsidizing the rich to buy cars they could well afford in the first place. European Union rules mean that all European manufacturers’ electric cars will qualify. Tesla is apparently excluded because its vehicles are too expensive to qualify for the scheme. The new Model 3 would qualify when it finally gets to Germany.
Successful upmarket German car makers like BMW, Mercedes and Volkswagen’s Audi and Porsche are seen as under severe pressure to meet harsh European Union (E.U.) fuel consumption targets for 2021, and a boost to the sales of zero emission (at least at the tailpipe) cars are seen as critical in meeting those targets.
The E.U. demanded average vehicle fleet fuel consumption of 43 miles per U.S. gallon by 2015, and this has largely been met. Requirements will tighten severely by 2021 to 57.4 miles per U.S. gallon. The U.S. requires a slightly less aggressive 54.5 mpg by 2025.

In a report last December, PA Consulting said BMW and Volkswagen are most at risk from incurring massive fines of up $1 billion each for possibly flouting E.U rules on fuel economy. Other manufacturers exposed to big fines include Jaguar Land Rover and Hyundai of Korea and its Kia affiliate. All automotive manufacturers operating in Europe will have to sharply raise the amount of electric and plug-in hybrid vehicles in their fleets.
“We calculate that to meet the targets, BMW, Audi and Volkswagen will need 25 per cent of their European registrations (sales) to be of cars with alternative engines in 2021,” PA consulting said.
Without this government subsidy, it is likely manufacturers would have needed to finance a similar scheme on their own, given the public reluctance to buy electric cars, currently seen as costing about twice as much as they should, with a need for double the range.Peter Schmidt, editor of British-based Automotive Industry Data said German subsidies will give a big boost to the battle to meet this CO2 requirement.
“If manufacturers like BMW and Mercedes don’t sell sufficient electric cars or plug-in hybrids they stand next to no chance of meeting the 2021 fleet average rules. If they don’t meet it, the fines from Brussels will be astronomical,” Schmidt said in an interview.
Germany, Europe’s biggest car market, announced a 1.2 billion euro fund, with manufacturers contributing 600 million euros ($680 million). Each electric car sale would receive a rebate of 4,000 euros ($4,500). Plug-in hybrids qualify for 3,000 euros. When the scheme was first mooted, it seemed the subsidy would be 5,000 euros with manufacturers contributing 25%. The scheme, starting next month, will expire when it runs out of money. Germany also allocated 300 million euros to boost the electric recharging network, and 100 million to allow government departments to buy electric cars.  Only cars priced under 60,000 euros ($67,900) will qualify.
Currently there are a total of about 30,000 electric vehicles on German roads. Schmidt said that thanks to the new scheme, maybe a total of 500,000 electric cars would be on German roads by 2020.
Schmidt said car sharing schemes, currently in vogue for the premium manufacturers, are seen as a critical to raising electric car sales because these often unwanted cars can be dumped in fleets. These count as sales and raise manufacturers’ fleet average fuel consumption.
Most European countries subsidize electric car sales. France offers 10,000 euros ($11,300) for a diesel at least 14 years old. Britain’s subsidies are closer to the German level. Oil rich and socialist Norway offers tax free electric car purchases, plus free parking in cities and free entry where regular cars are banned.
The biggest selling electric cars in Europe now are the Renault Zoe and Nissan Leaf. VW offers the battery-only city car the eUp, and small family sedan, the eGolf. BMW sells the i3. The market share for electric cars in Western Europe is less than 1%. The plug-in hybrid Mitsubishi Outlander SUV has been a rare success.


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