State Subsidies

Kick-Starting Germany's E-Car Market

Angela Merkel, Germany's chancellor, connects an electric charging cable to a VW E-Golf automobile, produced by Volkswagen AG, following the German-Chinese signing ceremony at Volkswagen AG's headquarters in Wolfsburg, Germany, on Monday, April 24, 2012. Volkswagen AG , EuropeÕs biggest carmaker, plans to open a new assembly plant in western China in 2015 to strengthen its position in the manufacturerÕs largest market. Photographer: Michele Tantussi/Bloomberg *** Local Caption *** Angela Merkel
Chancellor Angela Merkel wants to crank up Germany's electric car market, but it might take another decade before the market takes off globally.
  • Why it matters

    Why it matters

    Germany’s carmakers Volkswagen, BMW and Mercedes-maker Daimler could lose market share to Toyota, Tesla and others if they fail to successfully sell electrically-powered cars.

  • Facts


    • The German government fears the country’s car industry might not be a key supplier in 10 or 20 years if it fails to successfully sell electric cars.
    • Under the plan announced on Wednesday, consumers would receive €4,000 for fully electric cars and €3,000 for hybrids, with total subsidies capped at €1.2 billion.
    • Germany has pledged to put 1 million electric cars on the roads by 2020, but at the start of 2016, only 25,502 fully electric cars and 130, 365 hybrids were registered.
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Germany plans to hand out €4,000 or $4,520, to buyers of fully electric cars and €3,000 to buyers of plug-in hybrid cars to boost demand and protect the country’s car industry from losing market share, amid growing competition from rivals such as Toyota, Tesla and China’s BYD.

“We are currently experiencing a revolution in the automobile industry,” said Germany’s Transport Minister Alexander Dobrindt. “It is not predictable whether today’s top companies will also be the world’s top companies in 10 years’ time or whether these will completely different ones.” Currently VW is the world’s largest carmaker, marginally ahead of Toyota, while Mercedes and BMW are the world’s top luxury carmakers.

Economics minister Sigmar Gabriel said the subsidies program, which totals €1.6 billion and includes €600 million from BMW, Daimler and Volkswagen, was an “active industry policy” aimed at keeping jobs in Germany and rebuilding the country’s electrical chemicals industry to manufacture batteries.

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