German politicians and automakers are discussing the possibility of crafting $5,500 subsidies tor the country’s hybrid cars and electric vehicles (EV), an aide to German Chancellor Angela Merkel said Friday.
To counteract the effect sagging crude prices are having on Germany’s electric vehicle market, leaders in Merkel’s ruling coalition are considering using public dollars to boost electric car sales, Horst Seehofer, head of the Christian Social Union (CSU) and senior aide to Merkel, said.
Germany plans on bringing one million electric vehicles to market by 2020. But because oil prices are so low and cheap gas-powered cars so ubiquitous, it’s been a rough go for German automakers to deliver on that plan.
Automakers have only managed to place 30,000 electric cars on Germany’s roads since 2015.
Crude has plummeted in recent months to $32.37 per barrel from a high of $100 in 2014, bringing with it consternation from some that renewable markets will feel a backlash.
“[The] industry as a whole, I think, will definitely suffer from lower oil prices,” electric vehicle-maker Elon Musk told CNN earlier this week. “It just makes economic sense.”
“It probably affects us a little less because we have quite significant product differentiation,” the head of Tesla added.
Electric carmakers are not the only companies to escape the wrath of low gas prices — oil companies are feeling the pain as well. Chevron, for example, has suffered its first major fourth-quarter loss since 2002 Friday.
Seehofer also said the group was entertaining the idea of allowing the country’s EV and hybrid automakers to pitch in for the cost of the incentive.
Under this proposal, automakers would contribute between roughly $1,600 and $2,200 toward the incentive, according to a report from German magazine, Der Spiegel.
The idea was broached earlier this month when Germany’s Economics Minister Sigmar Gabriel included a subsidized cash incentive for new electric car purchases among his solutions to boost county’s meager electric vehicle sales.
The campaign is being stymied somewhat by Finance Minister Wolfgang Schaeuble, a member of Merkel’s center-right party, who opposes subsidies for both electric vehicles and buyers.
Another conservative German politician called the idea unacceptable.
“In the face of the auto industry’s billions in profits over the past few years, providing expensive subsidies at the expense of the public is not acceptable,” Eckhart Rehberg, a senior conservative lawmaker, said of the proposal.
The need to kick start EV sales comes amid last year’s Volkswagen emission fixing scandal.
VW CEO Matthias Müller, who was appointed the company’s CEO after the company admitted to affixing cheat devices on cars to fool emissions test, said it is imperative for VW to become a top seller of electric vehicles.
“A true breakthrough for electric mobility will only be achieved if politics, society, and authorities work together more closely,” Müller said at a company meeting in Brussels earlier this week.
However, he did note that European countries have to overhaul their infrastructure to accommodate the electric vehicle market.
“Talks within the German government are constructive. We are counting on arriving at a good solution to help achieve our goals,” a spokeswoman with Germany’s economic minster told reporters.
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