Angela Markel's government has reached an agreement on Tuesday providing subsidy worth €1.2 billion ($1.35 billion) to boost up the sluggish electric car sale. The agreement has been reached through a meeting of senior German officials with representatives from the auto industry.
The meeting has taken place on Tuesday and chaired by the German Chancellor, Angela Markel. Agenda of the meeting include discussing incentives on electric car purchases and government funds for a national network of charging stations.
According to the agreement, buyers of electric cars will be able to receive as much as €4,000 in rebates to help offset the higher price of the vehicle. Meanwhile, subsidy for €3,000 has been proposed for purchasing the hybrid cars. The agreement also asks the electric car industry to shoulder 50% of the fund required under the incentive scheme, reports Bloomberg quoting Wolfgang Schaeuble, the German Finance Minister while addressing a press conference.
Existing rules in Germany offer electric car buyers with exemption from the annual circulation tax for the first 10 years. Germany offers the lowest bonus on purchasing zero emission cars compared to other matured markets. Many German politicians believe that the influential electric car makers will gobble up the incentives, analyzes Financial Times, as the reason behind Germany's lagging behind in offering bonuses. However, electric cars worth more than €60,000 won't be considered as eligible for the subsidy since the government is reluctant in offering subsidies to the wealthy purchasers. The subsidies will be offered on a first-come-first-serve basis, while no additional fund will be allocated once the €1.2 billion has been exhausted, according to a report published in The Wall Street Journal. The automobile industry observes incentives as a potential game changer considering size of the German market. Auto market in Germany accounts for a quarter of all auto sales across Europe. In February, Markel has hinted that she is ready to offer subsidies in a view to reach her preset goal for 1 million electric cars on German streets by 2020. Tuesday's agreement has been sealed following discussions with automotive CEOs on dividing the funding between government and concerned industry. The German chancellor is believed to be walking a tightrope within her governing bloc through exposing her support for the program. Critics have opposed the move for providing special financial support to a particular industry.
