German states push for additional help for carmakers

Three German states with a strong car industry presence have called for additional support for the sector in order to help it survive the corona crisis. Baden-Württemberg, where Daimler and Porsche are based; Bavaria,the home of BMW, and VW base Lower Saxony have "outbid each other" with proposals, according to a report in Frankfurter Allgemeine Zeitung. Baden Württemberg's economy minister Nicole Hoffmeister-Kraut called for an "innovation premium" that could be graded according to emissions and would also include petrol and diesel models. "To ignore the modern combustion engine completely now would mean a massive threat to existing structures and jobs," she told the paper. Hoffmeister-Kraut also called for the EU to suspend fines for excessive emissions in order to safeguard the company's liquidity. 

Bavaria's economy minister Hubert Aiwanger said it made more sense to spend taxpayer money on making environmentally friendly cars than on unemployment and bankruptcies. And Lower Saxony's premier Stephan Weil proposed a "cash for clunkers" initiative modelled on Germany's car industry support programme during the 2009 financial crisis. "In particular, the switch to environmentally friendly propulsion systems can be accelerated considerably and the automotive industry can be supported in its structural change," he said, according to a report in Focus Online. However, Weil opposed a withdrawal from EU climate targets for the industry: "Delaying CO2 targets is unlikely to be feasible at European level and would call into question high levels of corporate investment."

BMW has also proposed an "innovation premium" for car buyers to boost the economy and accelerate the switch to climate-friendly mobility. Germany's largest carmaker has suspended production in a bid to cushion the impact of the coronavirus outbreak and introduced 'short-time' work for its employees in order to limit the damage to its business. Leading industry and trade union representatives have recently urged the government to back them in efforts to make the EU drop the planned tightening of emission limits on cars from the current fleet emission limit of 95 g of CO2 per kilometre.