On 4th June, the German government announced the details of their new post Covid-19 stimulus package. This package includes over €130 billion of new incentives for the car industry in the form of grants and tax reductions. That said, most notably, the plan does not include any incentives for internal-combustion cars.
Previously, buyers of full-electric cars with a net list price of up to €40,000 were eligible for a grant of €3,000 from the government and €3,000 from the manufacturer. The new incentives will double the government contribution and bring the total potential grant available up to €9,000. This new incentive aims to bring the price of electric vehicles in line with their traditional fuelled alternatives. However, the €40,000 threshold does mean that higher priced vehicles from brands like Audi, Mercedes-Benz, BMW and Tesla are not eligible for the full amount. In addition to the grant income, new car buyers will benefit from a lower Value-Added-Tax rate of 16%, previously 19%, for the next 6 months.
Together with these new stimulus schemes, the government also intends to overhaul motor vehicle taxation and will introduce a new staggered tax from 2021 that penalises vehicles with CO2 emissions of more than 95g/km. In addition, Angela Merkel, German Chancellor, also set out plans to make it mandatory for all petrol stations in the country to have an EV charge point. It is believed this will create around 1 million charging stations in Germany by 2030.
Germany have not been the only European superpower to announce radical plans to boost the alternative fuelled car industry. At the end of May, French President, Emmanuel Macron, announced an €8 million plan for the country’s car manufacturers. Similar to Germany, France have increased government contribution towards electric cars to €7,000 from the current €6,000. Corporate electric fleet vehicles will also be eligible for €5,000 grants and new diesel or petrol cars may be eligible for up to €3,000 if the individual can prove their new vehicle is cleaner than their old one.
In contrast, the UK government has not yet announced their economic plan for Coronavirus recovery and seems to have no intention of prioritising electric travel. Despite the Prime Minister, Boris Johnson, outlining his ‘undiminished’ commitment to curbing CO2 emissions in mid-May, he has not directly responded to any questioning about the French or German stimulus schemes. Moreover, UK automotive industry representatives have held confidential talks with the government over a possible £1.5 million scrappage scheme which would encourage petrol and diesel cars on an equal footing with cleaner vehicles. The suggested plan would take a further £2,500 off the price of a car and lead to a potential 600,000 new cars on the road. The Society of Motor Manufacturers and Traders (SMMT) CEO, Mike Hawes, in a letter to Rishi Sunak, pushed for support for ‘the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing’.
We believe that the packages introduced by Germany and France are clear indications of those governments’ commitment to a greener future. During the Covid-19 pandemic, we have seen our air become cleaner, nature recover, the electric car market out-perform traditional fuels for the first time, and we have seen a direct correlation between heavily polluted areas and Covid-19 death rates. We honestly believe that this has been a great opportunity to learn. However, how can we move forward from this situation if we fall back into the same habits?
If you are thinking of switching to an electric vehicle and would like to know more about the grants that are currently available to you, please get in touch. A member of our team would be happy to discuss this in more detail and answer any questions that you have. Call us on 0141 280 8890 or drop us an email at [email protected].