Stimulus to boost VW's electric push

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

Buyer incentives for passenger cars, including a lowering of value added tax to 16% from 19% were included as part of a €130bn (roughly R2,480,298,051,000) 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 SUVs, Germany included a €6,000 (roughly R114,445) incentive for battery electric cars costing below €40,000 (roughly R762,524).

This brings consumer incentives for electric cars to €9,000 (roughly R171,501) once a €3,000 (roughly R57,163) manufacturer stipend is included, but the €40,000 (roughly R762,263) 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 (roughly R838,266) in Germany while prices for the Mercedes EQC start at €71,590 (roughly R1,364,618) and Audi’s E-Tron prices start at around €69,900 (roughly R1,331,988).

The stimulus will benefit mainly cheaper electric cars like Kia’s e-Niro, which starts at €34,290 (roughly R653,446) while VW’s new ID3 model will cost €29,990 (roughly R571,684) when it launches this summer. Peugeot’s e-208 GT, costing €36,600 (roughly R697,687), 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% respectively. Hybrid cars made up 6.6% of new registrations in 2019.

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.