May 18, 2011 / 1:55 PM / 8 years ago

German cabinet agrees plan to boost electric cars

BERLIN (Reuters) - Germany’s cabinet agreed on Wednesday plans to boost the country’s electric auto sector with billions of euros in subsidies, aiming to have 1 million of the cars on the road by 2020.

Economy Minister Philipp Roesler poses in a electric car after taking over the economy ministry from his predecessor in Berlin May 16, 2011. REUTERS/Thomas Peter

Berlin hopes the move will help Germany, home to some of the world’s largest automakers, shift towards the emerging technology and has come alongside pledges from the private sector for some 12 billion euros in investments in the coming years.

Chancellor Angela Merkel has said she hopes to make Germany the world’s leading market in the sector, while Daimler DAIG.n.DE chief Dieter Zetsche has predicted that in 50 years all cars will be electric, Bild newspaper wrote on Wednesday.

“The German auto industry — manufacturers and component suppliers — has the best of chances to become the lead provider as well, thanks to the speed of its innovation,” said Matthias Wissmann, president of Germany’s VDA auto industry association.

In order to make Germany the world’s leading producer of electric cars, research would be especially important, Wissmann added in a statement, and care must be taken to ensure patents are commercially exploited in the country and not elsewhere.

Berlin’s move will double state support for research and development to 2 billion euros through 2013, aiming to improve battery technology in particular, and create tax incentives for companies and individuals to purchase the cars.

Motor vehicle tax is to be waived for the first 10 years of registration, while taxes for professional use vehicles are to be reduced to help offset the cars’ higher price tags compared to gasoline- and diesel-powered models.

The government also plans to purchase thousands of the vehicles, with 10 percent of all new fleet acquisitions or rentals to be electric, while special parking rights and access to designated lanes on the autobahns are planned.

All of Germany’s auto majors, including Daimler, Volkswagen (VOWG_p.DE) and BMW (BMWG.DE), have electric car projects or hybrids in various stages of development, although only 2,307 fully electric vehicles were registered in Germany by 2011.

It thus remains to be seen what popularity electric cars may have in a country where the automobile is considered sacrosanct, and where more people own their vehicles than their homes.

Editing by Mike Nesbit

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