Incentives of 10 thousand euros for those who buy an electric car, but environmentalists protest

Double or fold? It is the dilemma that divides the government of Germany and concerns the future of public subsidies for electric cars. Transport Minister Volker Wissing, exponent of the Liberal Democrats (ie the executive party considered closest to the interests of the powerful German car sector), wants to increase the incentives to buy battery-powered cars and bring them up to 10,800 euros. But his plan clashes not only with environmental experts and NGOs, but also with colleague Robert Habeck, Verdi’s finance minister, who instead plans to drastically reduce subsidies for clean electricity and completely put an end to them for hybrid cars.

According to the business newspaper Handelsblatt, Wissing’s plan calls for buyers of electric cars, which cost up to 40,000 euros, to receive 10,800 euros in state aid instead of the current 6,000 euros, in addition to the car manufacturers’ premium, which currently stands at around 3,000 euros. . Vehicles costing up to € 60,000 could instead receive € 8,400 instead of the current € 5,000 and the subsidies would be extended to 2027. To get the full subsidy, buyers would have to scrap a car with an internal combustion engine.

The Ministry of Transport’s proposal also includes more than 50 other measures to accelerate the transition to low-carbon mobility, including climate-neutral aviation research programs, railway digitization and support for public transport. But the core of Wissing’s plan, and also the more delicate one from a political point of view, relates to incentives. On the one hand, there is the car lobby pushing: the sector, which is facing a worrying delay in electricity, has once again exceeded the government’s climate target for 2021, and Wissings ‘proposal aims to speed up the transition without consequences for car manufacturers’ accounts.

The problem is that the pact between the Social Democrats, the Liberal Democrats and the Greens, which gave birth to the executive with Olaf Scholz at the helm, contains measures in the opposite direction. As explained by Minister Habeck, the plan is that from 1 January 2023, the incentives will only be available for vehicles with a “proven positive climate protection effect”. Within this definition, only 100% electric cars are included, while omitting those that combine battery power with a traditional internal combustion engine. This means that the subsidies for the purchase of plug-in hybrid cars will cease in full at the end of December 2022, while the subsidies for electric cars will be gradually reduced: In 2023, the incentives will be halved to the max. 4 thousand euros, in which case again the following year to 3 thousand euros.

“We want to focus on the future promotion of electric cars and focus more on climate protection,” Habeck said. “In our opinion, plug-in hybrids are marketable and no longer require public funding,” the minister explained. According to the Federal Office for Economic Affairs and Export Control, applications for funding for around 625,000 hybrid and electric cars were submitted to the German government in 2021, more than double that number by 2020. “The funding is still at a high level and therefore of interest to consumers , “Habeck remarked.

To support the Minister of Economy, there are the NGOs and their experts who, on the other hand, rejected Mr Wissing’s plan without ifs and buts: according to environmentalists, doubling subsidies would mean spending 73 billion euros on public funds in 2027. Studies also increases the risk that transport emissions with the Wissing plan in 2030 will increase slightly from current levels. For Greenpeace, the transport minister’s proposal is a “sinfully expensive gift to the car industry” that “does almost nothing for climate protection”.

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