France and Germany lead EU countries in delivering 'green stimulus' packages; increasing EV subsidies

Tue 16 June 2020 View all news

France and Germany have announced plans for major 'green stimulus' packages as the countries emerge from lockdown and seek to get their economies moving again. Other EU countries, including Spain and Holland have also announced revitalisation plans with strong 'green' elements.

France has announced an automotive industry bailout package worth €8 billion ($8.8 billion), including substantial support for electrification. 

President Emmanuel Macron (reported by Charged.EVs) said he wants France to become the leading producer of clean cars in Europe. “Our country should embody this avant-garde. We need not only to save [the industry] but transform it.”

Macron's Minister of Economy and Finance Bruno Le Maire said: “We are ready to support the demand for vehicles, but it will be support for clean vehicles that emit less CO2, especially electric vehicles.”

The purchase incentive for battery electric vehicles (BEVs) and fuel cell vehicles (FCVs) increased from €6,000 to €7,000, as of June 1. For fleet buyers, (which accounted for over 50% of the French market in 2019), the bonus for buying a plug-in vehicle rose from €3,000 to €5,000. (Subsidies are lower for EVs priced at over €45,000 and zero for those over €60,000.) PHEVs with a range of over 50km also have increased support under the French plans.

Meanwhile, the German Government has also unveiled a stimulus package that supports vehicle electrification. The country is also reported to be planning the introduction of a climate protection surcharge which would double motor vehicle tax for cars emitting more than 195g/km CO2.

The overall German package, which is expected to cost €130 billion over the next two years, includes a cut in the country’s VAT rate.

The legislation establishes a €50 billion fund for “addressing climate change, innovation and digitization.”

The current EV incentive of €3,000 will be doubled to €6,000 for new cars costing less than €40,000. The price limit to receive adjusted tax benefits for EVs will be raised from €40,000 to €60,000, and an existing EV tax exemption will be extended from 2025 to 2030.

There are also lower incentives for PHEVs but - as Electrive reports - Germany's coalition Government has now also recognised that plug-in hybrids are not more environmentally friendly per se, but the driving and charging profile is essential.

The Government paper says: “As part of the national platform ‘Mobility of the Future’, we will discuss the question of optimised utilisation of the electric drive in plug-in hybrid vehicles. But it’s not yet clear what the consequences of this will be.”

The 'ecological rebate' aims to promote the replacement of the country’s motor vehicles with climate- and environmentally-friendly electric vehicles, according to the Government paper. 

The German Government has also announced a national hydrogen strategy, with plans to ramp up production capacity to 5 GW by 2030 and 10 GW by 2040. Euractiv Germany reports that  €7 billion will be invested in new businesses and research. 

Germany’s economy minister Peter Altmaier called the 28-page document the “greatest innovation since the EEG”, a reference to the landmark German renewable energy sources act which came into force in 2000.

With this “quantum leap,” Germany wants to become the world leader in hydrogen technologies, said Altmaier.

By 2030, Germany aims to have generators with a total capacity of up to 5 GW, which corresponds to hydrogen generation of about 14TWh. 

Hydrogen will be used first where processes cannot be electrified – for example, in heavy goods transport, steel production, the chemical industry and aviation. Companies in these sectors will receive financial support if they invest in electrolysis plants to transform their production processes. 

Germany's environment minister did not originally envisage the use of hydrogen in the transport sector. However, there are now plans to support the development of infrastructure for hydrogen refuelling.

Spain, meanwhile, has announced a €3.75 billion aid package for the domestic motor industry, which includes a scrappage scheme with green strings, a bigger focus on electric charging points and funding for hydrogen. The plan also foresees bulk orders of heavy vehicles powered by natural gas, an aggressive rollout of electric charging points – 50,000 by 2023 – and wider deployment of e-bike rideshare schemes.

The Netherlands has also announced support for the EV industry with a package of measures including subsidies for the purchase of both new and used electric vehicles.

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