German automotive 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.