German politicians seek tax break for electric car buyers

BERLIN (Reuters) - Germany’s coalition parties plan to boost demand for electric cars by exempting them from vehicle tax, according to a draft document seen by Reuters on Wednesday.

A battery charger sign for electric cars is painted on the ground of a parking ground near the soccer stadium in Wolfsburg, Germany, April 6, 2016. REUTERS/Kai Pfaffenbach

German auto executives have long pushed the government to introduce incentives to lift demand for electric cars. The government aims to increase the number of electric cars on German roads to a million by 2020 from just 50,000.

Under the proposed scheme individuals who buy an electric car before 2020 would not have to pay vehicle tax for 10 years, the eight-page document on “Automobility of the future”, shows.

Further measures included in the document prepared for a meeting of party executives in Rust, southern Germany, include a massive expansion of charging stations, raising the share of electric cars in the government’s fleet to 20 percent from Jan. 1, 2017 and a research program to boost the development of batteries.

The parliamentary groups of Chancellor Angela Merkel’s conservatives and her Social Democrat (SPD) partners, have agreed on the main points and could decide on the full package on Thursday, ending months of haggling, the Sueddeutsche Zeitung reported earlier.

Purchase incentives are also possible but they would be decided later this month at a meeting of Merkel, SPD Economy Minister Sigmar Gabriel and auto chiefs, according to the document.

Once details are agreed between the parties and by Merkel’s cabinet, parliamentary approval will be needed.

The coalition parties expect the auto industry to make a “significant contribution” towards charging infrastructure, help set up the competitive production of battery cells in Europe and promote e-cars more with advertising, according to the document.

Protecting Germany’s auto industry, which generated sales of 370 billion euros ($421 billion) in 2014, will only be possible if automated driving and electromobility are developed further, the document says.

A passion for fast, powerful cars among German drivers has fed demand for petrol and diesel engines, and Germany lags countries such as Norway and the Netherlands in subsidies and providing charging points for electric cars.

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Reporting by Andreas Rinke, Gernot Heller and Holger Hansen; Writing by Madeline Chambers and Caroline Copley; Editing by Raissa Kasolowsky and Elaine Hardcastle