German auto stimulus to boost Volkswagen’s electric push

Via Reuters Finance

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

FILE PHOTO: A Volkswagen E-Golf electric vehicle is displayed at the Canadian International Auto Show in Toronto, Ontario, Canada February 18, 2020. REUTERS/Chris Helgren/File Photo

Buyer incentives for passenger cars, including a lowering of value added tax to 16% from 19% were included as part of a 130 billion euro ($145.74 billion) 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 euro incentive for battery electric cars costing below 40,000 euros.

This brings consumer incentives for electric cars to 9,000 euros once a 3,000 euro 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 euros in Germany while prices for the Mercedes EQC start at 71,590 euros and Audi’s E-Tron prices start at around 69,900 euros.

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

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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.

The average vehicle emissions of a new car last year in Germany was around 150.9 grams of CO2 per kilometre.

($1 = 0.8920 euros)

Reporting by Markus Wacket in Berlin and Edward Taylor in Frankfurt; Editing by Michelle Martin