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Germany, France announce plans to strengthen EV incentives

Sat 16 February 2019 | Back to news list

The Franch Government plans to invest €700 million over the next five years in an attempt to ensure the country becomes a leader in electric vehicle (EV) battery technology and fend off the challenge from Asian rivals. The German Government announced a similar move in November last year when it said it would set aside €1 billion to support battery cell production in the country to reduce reliance on overseas components in its domestic market. Germany will also extend company car tax incentives for EVs.

President Emmanuel Macron announced the French move in a speech to the country’s International Organisation of Motor Vehicle Manufacturers (OICA). The funding, he said, is part of a strategy to boost domestic car makers and reduce their reliance on Asian companies.

Germany is reported to also see the increase in battery production as a way of shoring up jobs in the country as the automotive industry readjusts to the challenges of electrification and increasing automation.

President Macron said two factories would be built, one each in France and Germany, under a French-German initiative, at a time when their countries’ carmakers are waking up to the threats posed from relying on Chinese suppliers in an age of international trade wars.

Macron said (reported by Reuters): “As the president of France, I cannot be happy with a situation where 100 percent of the batteries of my electric vehicles are produced in Asia. 

“In terms of sovereignty and independence, I think it’s not good in the long run for our industry and the European industry to be 100 percent reliant on non-Europeans. So that’s why according to me on batteries we need a European wake-up call.”

While some carmakers assemble battery packs, Europe has no significant production of their constituent cells - currently dominated by a handful of firms including China’s CATL and Korean rivals LG Chem and Samsung.

Macron’s plan will also include facilitating the construction of electric vehicle charging points, giving more visibility to carmakers about electric vehicle bonuses for consumers and increasing the Government’s EV purchasing targets.

Germany also says it plans to extend tax incentives for electric company cars as the Government tries to increase electric car sales in the wake of a diesel emissions scandal that has hit its car industry in recent years. Half of all cars sold in the country are company cars. 

The finance minister has announced a decision not to end tax support for electric cars and plug-in hybrid company cars in 2021 but extend them, possibly to 2030. He said the policy would help improve air quality and meet climate goals.

However, rules for plug-in hybrid vehicles are likely to be tightened, so that only cars that can travel on electric power further than they do today will be eligible.

German Government subsidy schemes are reported to have helped boost sales but, even with rising demand, electric cars made up only 1 percent of new car registrations last year, according to the KBA motor vehicle authority.

The Government has acknowledged it will miss its target of having 1 million electric vehicles on the road by 2020 by two years.

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