Germany debates new electric car subsidies ahead of auto industry crisis summit

German policymakers, industry experts, environmental NGOs and unions were split over a proposal to support the country’s ailing car industry with a new ‘cash for clunkers’ scheme, ahead of an industry crisis summit convened by the economy ministry. Members of chancellor Olaf Scholz’s Social Democrats (SPD) argued in a paper seen by German media that people who trade in their old combustion engine car against a new electric model should receive a bonus payment of 6,000 euros, while drivers buying a used electric car should get a subsidy of 3,000 euros. To boost faltering electric car sales, the paper also suggested subsidies for electric car leasing for people with low or medium incomes, as well as support for private charging boxes, storage units and charging points.

Green economy minister Robert Habeck was scheduled to discuss the industry crisis with representatives of the country's carmakers, sector association VDA and the metalworkers’ union (IG Metall) on Monday (23 September). Officials said last week that the government was weighing options to counter the continuing weakness in electric car sales, which collapsed after the government axed purchasing subsidies last year. VW, which was hit particularly hard by the sales slump, recently terminated a job security agreement with unions in Germany that has been in place for decades, making factory closures and redundancies a possibility.

The metalworkers’ union said new subsidies would help carmakers, suppliers, and secure jobs, while also boosting the country’s economy. Environmental NGO Greenpeace called for a “premium for small, economical e-cars up to a maximum of 30,000 euros” financed by a new registration tax for heavy combustion vehicles, reported news agency dpa. The Climate Alliance Germany, an alliance of around 150 organisations, called for a “socially staggered purchase premium”.

Leading representatives of the opposition Christian Democrats (CDU) argued that state support should not be limited to electric cars, and called for postponing the tightening of the EU’s car emission limits. “We must remain open to all technologies instead of betting on a single form of propulsion,” Saxony state premier Michael Kretschmer told tabloid Bild. Lukas Köhler, a member of the Free Democrats (FDP), who are in a government coalition with the Greens and Social Democrats, warned the car summit “must not turn into a subsidy summit,” but should instead aim to improve framework conditions for industry in general.

Car industry expert Ferdinand Dudenhöffer warned that the tight government budget meant that generous support payments were unrealistic. He also said that the discussion about new support payments was likely to put an additional break on sales, as consumers adopt a “wait-and-see” attitude.