After Years Without One, Germany Finally Approves Clever Incentive Scheme For Plug-in Cars, Funded In Part by The Auto Industry

It’s the biggest automotive market by volume in Europe and is home to Volkswagen, Daimler and BMW — not to mention their associated brands like Audi, Porsche, Mercedes-Benz and Smart. It also happens to be a world-leader in solar power, thanks in part to forward-thinking feed-in energy tariffs that drove more than fifteen years of exponential growth in domestic and commercial photovoltaic installations.

Germany wants the auto industry to pay for half of all plug-in car incentives.

Germany wants the auto industry to pay for half of all plug-in car incentives.

But while Germany has been forward-thinking on clean, domestically generated power, it has historically dragged its feet on the subject of electric car incentives. Rather than offer consumers financial incentives to make the switch to an electric car, it has argued that incentives can artificially inflate electric car prices. Essentially, it has suggested, offering incentives to customers for buying an electric car encourages automakers to artificially raise their car’s sticker price to an amount commensurate with whatever incentives being offered: the exact opposite of what’s really needed for electric cars to reach mass-adoption status.

The incentive program is designed to help Germany reach its lofty 1-million EV target by 2020.

The incentive program is designed to help Germany reach its lofty 1-million EV target by 2020.

Consequently, Germany’s attitude thus far toward electric cars — despite setting its own lofty goal in 2010 of having 1 million electric cars on the nation’s roads by 2020 –has been to rely on free-market economics and healthy competition to drive down the price of electric cars and encourage electric car mass-adoption

To date, that policy hasn’t worked, which is why Germany is now launching its own €1.2 billion ($1.4 billion) electric car incentive program designed to help it rapidly accelerate the number of plug-in cars on Germany’s roads. But unlike most electric car incentive schemes around the world, where governments singlehandedly foot the bill for the good of the nation, Germany’s incentive scheme is slightly different.

That’s because instead of being able to benefit from the incentives by rising sticker prices — Germany’s original fear with plug-in incentive programs — automakers will have to pitch in too, shouldering half of the cost of the incentive for each customer. Importantly too, only cars with a sticker price of under €60,000 are eligible for the discount: those buying new cars like the BMW i8 plug-in hybrid, various high-end Mercedes-Benz plug-in hybrids and both the Tesla Model S and Tesla Model X can’t apply for the discount.

In this way, Germany’s new plug-in car incentive program ensures that funds are spent where they’re most needed: encouraging affordable mass-market electric cars that average Germans can afford — not high-end luxury plug-in cars the wealthy could afford with (or without) incentives.

As Reuters and electrive reported earlier, German Transport Minister Alexander Dobrindt announced this morning that the German Government had come to an agreement with Volkswagen, Daimler and BMW under which electric car buyers in Germany will be awarded a €4,000 discount off the price of their new car, while those buying a plug-in hybrid will enjoy a €3,000 discount. While there’s no limit to how many cars will be eligible for the scheme, simple math suggests that the funds secured will help more than 400,000 plug-in car buyers obtain a discount for their new car.

Smart ForTwo ED

Right now, less than 0.1 percent of all cars in Germany are electric.

At the same time, Germany has committed to investing €300 million into a massive expansion of electric vehicle charging across the country. Of the funds committed to charging infrastructure development, the German government says it will funnel €200 million of the funds into DC quick charging stations, something it says should enable more than 5,000 new DC quick charging stations to be erected across the nation. The remaining €100 million will be spent on normal AC level 2 charging stations, which will be cited at places where owners are likely to leave their cars for extended periods of time and thus do not need rapid charging provision.

Finally, Minister Dobrindt committed to an increase in the number of electric vehicles in the German federal government’s fleet, earmarking €1 million to increase the number of plug-in vehicles used on official government business.

As things currently stand, less than 0.1 percent of all cars on Germany’s roads are powered by electricity. The rest are powered by gasoline or diesel, with a slight bias (around 5 percent) towards gasoline. In order for Germany to reach its 2020 goal, it needs to increase proportion of electric cars on its roads to at least 2.2 percent.

That might seem like an impossible goal, but it’s worth noting here that in Norway — where two thirds of all new cars sold last month were either electric or hybrid  — electric cars account for around 2.6 percent of all registered cars on the roads. It’s no secret that Norway managed such an impressive market penetration by offering generous incentives for electric car buyers, including exemption from sales tax as well as free parking and charging in certain cities and access to bus lanes.

Luxury plug-in cars with a sticker price over €60,000 won't be eligible for the discounts.

Luxury plug-in cars with a sticker price over €60,000 won’t be eligible for the discounts.

As a far larger country with a far larger number of cars on the road — 45 million versus the 2.6 million on the road in Norway — Germany may not be able to offer quite the same perks as its northern neighbors in order to encourage more electric cars.

But given the ongoing fallout surrounding the Volkswagen dieselgate scandal — and persistent rumors that other automakers from Germany may also be guilty of similar emissions deception — we think Germany’s new incentive program is exactly what’s needed to keep automakers focused on switching to electric cars without encouraging them to put up prices.

And that, we think you’ll agree, is good news for everyone.

(Those who can speak German may find the above video interesting. Those who can’t speak German can still watch it — but be advised the auto-generated captions aren’t great!)


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  • “In this way, Germany’s new plug-in car incentive program ensures that funds are spent where they’re most needed”

    In this way, Germany’s new plug-in car incentive program ensures that it will not fund the German luxury car makers’ largest nightmare: Tesla.

    • Joe

      Ha! Excellent observation.

    • Incorrect: if Model 3 comes in on budget, it too will be eligible for the incentive. If not, it won’t be. I support income-capped incentive programs as well as sticker-capped incentive programs. It helps more people make the switch. This isn’t about Tesla.

      • MEroller

        I personally do not reckon to get a piece of the new incentive cake by the time my Tesla Model 3 will actually be delivered, as it is capped to 600 Million Euros from each side. “First-come-first-serve” is the principle applied here, once the 2 x 600 million Euros have been spent the incentive automatically ends 🙁

        • Martin Lacey

          Let’s hope there is a huge uptake which encourages the German government to reconsider!

        • Martin Lacey

          What would make much more sense is that all manufacturers who sell cars in Germany should pay 500 Euro’s towards the cost of every EV sold in Germany, say for the first 500,000 units. That would create competition to get EV’s on the road. The current incentive to buyers is a dis-incentive for the maker!

      • Martin Lacey

        I think the German government make a good point which Nikki has succinctly put in her reply to to arne-nl.

        If you can afford a $70k+ EV why should you be given incentives? Look at all the median earners in the USA who are saving hard for the chance to own a model 3 or Bolt and the incentives are running out fast…. there will be some upset bunnies if the 200k number isn’t extended.

        UK based comment, not intended to be a political statement on USA governance – I’ll leave that to your democratic process. Now stop telling us to be governed by an un-elected and unaccountable government from another nation (that last bit was political – sorry!).

        • jdjd

          Well, at least you won’t have the EU over you…eventually.

          • Martin Lacey

            A great day for democracy.

            I hope we can trade and work closely with our European neighbors, but for that to happen Europe needs to establish a fully democratic process and parliament which carries out the will of it’s people. Currently that is not the case and it’s giving rise to a very strong right wing political underclass.

      • Electric Bill

        A dollar is still a dollar to you, and me, but a dollar still holds some value to the more affluent, and unless we intend for only urchins such as ourselves to buy EVs we should be offering some incentives to the more affluent, even if it is less than what you and I might expect.

        I feel there should be a reverse scale rebate– the more an, EV costs, the less incentive to be offered, but there sbould still be a positive incentive as, well as a negative– put a cap on the overall dollar amount offered for electrification, or perhaps a limit on how long such incentives will be offered: end all incentives on December 31st, say, with provision to extend such incentives if it appears more incentives are warranted.

        As soon as a tipping point is reached and the general public “gets it”… that they realize they should be buying EVs just because they make more sense economically, environmentally and from the, standpoint of national security… all such incentives should end.

        • Martin Lacey

          Now that’s what I call a well thought out policy idea. Any politicians reading this?

          • Electric Bill

            Thanks, Martin. I have contacted various politicos on several occasions about this or other ideas. I had alsocwritten Senator Feinstein, Barbara Boxer and others about shifting from a mainly military approach to terrorism, to one based heavily on inundating the Internet with a range of smart ads aimed at reducing the radicalization of young Americana as well as attacking the very idea that it is okay to commit suicide for any form of idealism, since their own holy book– the Korean, which many of them have never actually read– flatly condemns suicide and many of the other things the radicals rely on…rape, torture, etc.

            Unfortunately, “Citizens United” has resulted in many politicians no longer working on the things they were elected for, and are instead focused for several hours a day on fundraising.

            When you write a Senator, Congressman, Governor, etc., what usually happens is that a computer program notes that you used the words “environment”, “Electric”, “Vehicle”, “terrorists”, “OPEC”, etc., and the program writes up a computer – generated response that is hoped to answer your comment. Such form letters are usually quitectransparent; you can tell no human actually read your email, text or tweet, or wrote you, back.

            I don’t want to blame the politicians, fircthe most part, since they will be bumped out of office if they do not do what they are doing. I blame those that made “Citizens United” such an evil barrier to contend with.

            We cannot expect real humanoids to be responding to us and our needs until we manage to get CU overturned, or an amendment blocking it.

    • Joseph Dubeau

      What about the 2016 Cadillac ELR Coupe $67,990.

      • Martin Lacey

        If it was left to me only purely Electric powered vehicles should attract incentives. So no the butt ugly ELR wouldn’t get a grant…. maybe I’m mean!

  • takemitsusan

    The cap on price sounds good to me. But what stops car makers putting their prices up by the amount they have to contribute as incentive?

  • What about electric motorcycles? No incentives there?

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