German auto stimulus to boost VW's electric push

By REUTERS | 4 June 2020

BERLIN/FRANKFURT: Germany unveiled sweeping incentives for cheap electric cars and for hybrid vehicles, providing a boost to Volkswagen’s electric push while staggered taxes for polluting combustion-engined cars will penalise sports utility vehicles.

Buyer incentives for passenger cars, including a lowering of value added tax to 16% from 19% were included as part of a €130 billion (RM623bil) stimulus package to speed up Germany’s recovery from the coronavirus.

In addition to a staggered tax on vehicles emitting large amounts of carbon dioxide (CO2), hitting sports utility vehicles, Germany included a €6,000 (RM28,737) incentive for battery electric cars costing below €40,000 (RM192,000).

This brings consumer incentives for electric cars to €9,000 (RM43,105) once a €3,000 (RM14,369) manufacturer stipend is included, but the €40,000 price threshold means premium carmakers like BMW, Mercedes, and even Tesla are not eligible for the full amount.

Tesla’s Model 3 retails starting at €43,990 in Germany while prices for the Mercedes EQC start at €71,590 and Audi’s E-Tron prices start at around €69,900.

The stimulus will benefit mainly cheaper electric cars like Kia’s e-Niro, which starts at €34,290 while VW’s new ID3 model will cost €29,990 when it launches this summer. Peugeot’s e-208 GT, costing €36,600, will also benefit.

In Germany, electric cars made up 1.8% of new passenger car registrations last year, with diesel and petrol cars accounting for 32% and 59.2% percent respectively. Hybrid cars made up 6.6% of new registrations in 2019.

Germany said its motor vehicle tax will be reformed. From January 2021, cars with an emission of more than 95 grams of CO2 per kilometre will face a staggered tax.