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Germany to boost electric car incentives

Germany's Chancellor is chairing a meeting Tuesday at which the government is expected to decide on new incentives for buyers of electric cars. But the fight between ministers and the auto industry is far from over.

The meeting on Tuesday evening at the Chancellery will include representatives of major carmakers, and will consider providing cash subsidies to buyers of new electric vehicles and plug-in hybrids, according to government officials interviewed by DPA news agency.

The purpose of the move is to try to provide a catalytic shove to EV sales, which have been very weak in Germany. Only 25,500 pure EVs and 130,000 hybrids were on German roads as of January 2016, out of a total of 45 million cars. The government set a goal of one million EVs on the road by 2020, and at this point it looks very unlikely to meet it.

Modest budget

Sources told DPA the German government was prepared to spend up to a billion euros ($1.12 billion) over two years in order to encourage more people to buy electric vehicles (EVs) and hybrids. 600 million euros would go to direct subsidies to car buyers, and another 300 million would be invested in extending the network of fast-recharging stations. The remaining 100 million would go to other EV-related subsidies.

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The direct subsidy to buyers of pure EVs would be 5,000 euros ($5,600) per vehicle, and for hybrids 3,000 euros. This incentive would be available for two years. Starting 2018, the subsidies would decline to 3,000 and 2,000 euros respectively.

Incentives would only be available for cars priced under 60,000 euros. Policy-makers are considering giving smaller cars a proportionately larger benefit.

The government is said to be making its offer of direct subsidies contingent on carmakers contributing half the subsidy - i.e. they would have to match the government's funding of 600 million euros.

Pure EVs would also be freed of annual automobile license taxes for a period of 10 years, provided they were purchased before the end of 2020. In addition, commuters who recharge their EVs at work would not have to declare this as an accrued benefit for purposes of income tax reporting.

Another measure under consideration is a government purchasing quota for EVs: starting 2017, 20 percent of vehicles purchased by the federal government would have to be electric-powered.

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Norway's way

Norway is Europe's standout in EV sales,

with EVs accounting for 30 percent of all new cars sold in 2015 - with Volkswagen's e-Golf the highest seller. It's a straightforward result of incentives. Norway exempts most plug-in hybrids and pure EVs from sales tax and registration fees, which makes them price-competitive with regular fossil-fuel-burning cars.

It also gives EV drivers access to commuter lanes, free parking in most cities, and frees them of most ferry and bridge tolls. Norway has also set about putting in place a comprehensive fast-charging infrastructure.

Any incentive package under consideration in Germany can fruitfully be measured against Norway's. It's not clear that the incentives under consideration in Germany will be anywhere near as aggressive as those already in place in Norway, and so it seems doubtful whether Germany's measures will suffice to give EVs the boost the government says is intended.

nz/hg (dpa, AFP)

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