Germany may subsidize e-car sales

May 6, 2011 at 4:25 PM
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BERLIN, May 6 (UPI) -- Germany may kick-start electric car sales with subsidies worth $5.4 billion.

The government of Chancellor Angela Merkel has drafted a series of incentives to boost e-car sales, German newspapers Sueddeutsche Zeitung and Bild report.

Measures include free parking for e-cars and eliminating the motor vehicle tax for the first 10 years after a green vehicle's registration, the newspaper writes.

The latter can be very attractive financially: A car with a gasoline engine can cost up to $430 in taxes per year, a car that runs on diesel up to $880.

The government also plans to purchase thousands of e-cars for its ministries, the newspapers write.

The plans aren't yet backed by the entire Cabinet.

German Economy Minister Rainer Bruederle has in the past days spoken out against funding e-car purchases with tax money.

Officials from the German car sector, which includes such prominent brands as Volkswagen, Daimler, Audi, BMW and Porsche, have in the past called for direct purchase subsidies.

"If the German government really wants a leadership position for the German market, then it will have to introduce direct purchase funding," Daimler head Dieter Zetsche told German business daily Handelsblatt in January. "If it decides against the funding, the government should not pursue its goal of making Germany a leading market."

The United States, France and Italy, nations with powerful car sectors that compete with the Germans, have already introduced purchase funding ranging from $5,000 to $9,000 per car.

Berlin had previously been cool toward such purchase incentive models and has instead decided to fund research and development, including programs to develop the charging station infrastructure and boost battery technology, an area of expertise that has long belonged to Asia.

Eager to reduce the dependency on imported oil and cut carbon dioxide emissions from road traffic, the German government said it wants to have 1 million electric cars cruise its highways by 2020.

Given this ambitious target, Berlin needs to do something to boost e-car sales, says Stefan Bratzel, a German automobile expert at the University of Applied Sciences in Bergisch-Gladbach.

"Given the significant cost difference between electric and traditional cars, there is no way to achieve this goal without subsidies," Bratzel told Deutsche Welle.

Yet even subsidies won't help if the Germans have no cars to buy, or only those from foreign competitors.

Germany's powerful car industry has been criticized for being a tad late to the electric car game, with rivals from France and mainly Asia one to two years ahead when it comes to launching serial production.

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