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Merkel, Li struck e-car compromise - report

February 28, 2017

Smog-choked China slowed its electric car push at the behest of Chancellor Angela Merkel, claims Germany's "Handelsblatt" newspaper. The pause gives German exporters more time to gear up their e-car sales in China.

Bildergalerie 11. internationale Automobilmesse in Guangzhou, China
Image: picture-alliance/dpa

German business newspaper "Handelsblatt" reports that German carmakers active in China were relieved because they lacked capacity to fulfill intended higher Chinese quotas for e-cars and hybrid vehicles.

Quoting numerous sources in Beijing and Berlin, "Handelsblatt" said China's industry ministry, which began its push in September, had since slowed its quota introduction after "pressure" from German and Chinese carmaking lobbyists.

During a phone call in late January, according to "Handesblatt," Chancellor Merkel and Chinese Prime Minister Li Keqiang resolved the issue by agreeing on the "right way" to expand electrical vehicle mobility.

China Ministerpräsident Li Keqiang und Angela Merkel
June 2016: Merkel and Li in BeijingImage: picture-alliance/dpa/R. Jensen

Alone in 2015, China quadrupled its subsidies to Chinese car buyers to 4.3 billion euros - in a bid to ease widespread smog from fossil fuelled energy sources.

Last September's plan would have imposed penalties on carmakers who failed to raise the e-car and hybrid quota to 8 percent of their China sales in 2018.

That was to have risen two percent in each of the following two years while existing Chinese subsidies to e-car car owners would have been reduced.

Initially 'unattainable'

"Those were unattainable goals for the German firms, who so far have only sold a few thousand e-cars in China," said "Handelsblatt," referring to BMW, Daimler, Audi, and Volkswagen.

Last year, they sold 5 million mostly combustion-motor cars in China - about a fifth of all Chinese car sales - the largest portion going to Volkswagen.

The compromise clinched by Merkel with Li included a one-year delay and generous deadlines to meet quotas. Details were being finalized in Beijing, "Handelsblatt" reported.

Beijing, however, had left no room for doubt that all carmakers must do their part in expanding electric mobility in China, a key German trading partner.

"Beijing wanted to show itself to be a compromise-willing partner, while US President Donald Trump threatens import duties," said "Handelsblatt."

The compromise precedes Germany's hosting of the G-20 economic summit in Hamburg in July and an EU-China summit in Brussels in May.

E-car sales in Germany sluggish

Sluggish e-car sales in Germany were blamed by Volkswagen chief Matthias Müller last November on "inconsequent" behavior by German consumers.

Müller said that many held ecologically friendly ideals, but when it came to electric mobility "as consumers we don't touch them," referring to e-cars and hybrids.

Such vehicles make up only 1.7 percent or about 45,000 among Germany's total car sales of more than 3 million annually, according to the KBA federal vehicle agency.

New e-car and hybrid registrations in China last year amounted to more than one million, when trucks and busses were also counted, according to a recent study by Germany's Center for Automitive Management (CAM).

Trendsetter Norway

Europe's e-car trendsetter is Norway, with more than 100,000 electric cars on its roads, and electric vehicles accounting for nearly 30 percent of all new car sales, encouraged by Norwegian subsidies and ready availability of battery recharging.

German lobby association eMobilität says Germany's infrastructure so far is not user-friendly. Recharging is only provided at "islands" on the map. And, e-cars remain comparatively expensive despite government incentives paid since last year.

The ecologically-oriented VCD transport club says the federal government is far off its climate-friendly goal of having one million e-cars on German roads by 2020 - "thirty times as many as today!"

The VCD claims has expressed support for sharing of e-cars by commuters.

Job losses feared

Currently, Germany's auto industry employs 880,000 persons. Of these, 250,000 are involved in combustion-era drive technology, work far less needed for e-cars.

Early in January, IG Metall trade union head Jörg Hoffmann warned against job losses, saying "no-one should fall under the wheels."

ipj/gsw (dpa, Reuters)