Daily Bild reported on Thursday that Chancellor Angela Merkel's cabinet this month plans to make electric cars exempt from taxes usually placed on motor vehicles for ten years.
Electric cars currently cost, on average, several thousand euros more than their combustion-engine counterparts. The government hopes that if the tax burden is lifted, buying an e-vehicle will become more attractive than buying a regular car.
Merkel's administration also wants to put thousands of electric cars in service for government agencies, and double research funding to a total of €1 billion by 2013.
The car industry, for its part, has already called for billions more in subsidies.
The Frankfurter Allgemeine Zeitung reported this week that the National Electric Mobility Platform (NPE), a body consisting of government, research and car industry officials, argued the additional funds would eventually pay dividends in new jobs and revenues.
“If we take advantage of the opportunity provided by electric mobility,” the NPE said in a report, “it will yield potentially 30,000 new jobs by 2020.”
But these jobs will not come cheaply. According to the report, the industry plans on investing between €13 and 17 billion in electric vehicle research and development between 2012 and 2014.
The NPE estimated it will need the federal government to contribute an additional €3.8 billion in subsidies, though it remains unclear how much of that sum the government is willing to shoulder.
The report, to be presented to Merkel officially on May 11, calls for so-called “lighthouse” projects such as drive-train technology, battery technology and lightweight design to receive special attention.
On top of that, the purchases of electric vehicles are to be subsidized with tax incentives worth a total of €320 million.
However, Economy Minister Rainer Brüderle has steadfastly resisted the idea of offering a government rebate on the purchase of electric cars.
“It would be a disservice to electric mobility in Germany to initiate federal rebates,” Brüderle said Tuesday in Berlin.
“This kind of incentive could damage competition and actually create a disincentive to buy electric cars. The competitive market is the best motor of innovation and technological progress, also in the field of electric mobility.”
But other countries currently have broader incentives already in place, raising the possibility e-cars could fail to take off in Germany while the nation's auto industry lags behind in electric vehicle production.
Britain has eliminated the standard motor vehicle tax for electric cars and provides up to €5,800 in subsidies for each buyer. France offers a buyer premium of €5,000, while the United States offers tax incentives between €1,800 and €5,500.
Germany currently offers buyers of electric cars five years of freedom from the standard motor vehicle tax.