Germany considers $5,500 incentive for electric cars

BERLIN/FRANKFURT (Reuters) - German politicians and auto executives will discuss creating incentives worth up to 5,000 euros ($5,500) to boost sales of electric and hybrid cars, a senior ally of Chancellor Angela Merkel said on Friday.

Germany has set itself a goal of bringing 1 million electric cars onto its roads by 2020, but has so far made little progress in encouraging drivers to switch from more-polluting - but also generally cheaper - diesel and petrol vehicles.

The heads of the three parties in Merkel’s ruling coalition have weighed introducing a subsidy for electric car buyers, said Horst Seehofer, head of the Christian Social Union (CSU), sister party of Merkel’s Christian Democratic Union (CDU).

He added that the government was looking into whether car companies could co-finance the new incentive and that Merkel would discuss the issue with company executives next week.

Asked whether he was backing proposals to introduce an incentive of up to 5,000 euros, Seehofer said: “Bavaria is very much in favor of the buyer’s premium.”

Seehofer is premier of Bavaria, the southern German state where carmaker BMW is based.

Calls for supporting electric cars have grown since the Volkswagen emissions scandal erupted last year.

Economy Minister Sigmar Gabriel and Environment Minister Barbara Hendricks, both senior members of the Social Democrats (SPD), are both pushing for a rapid introduction of a so-called Kaufpraemie.

But Finance Minister Wolfgang Schaeuble, a senior member of Merkel’s center-right party, so far has thwarted any efforts to agree on such a subsidy for buyers of electric cars.

An Economy Ministry spokeswoman said on Friday: “Talks within the German government are constructive. We are counting on arriving at a good solution to help achieve our goals.”

Under the proposal being discussed, carmakers may contribute between 1,500 and 2,000 euros of the incentive, which would be paid into a common fund, German weekly magazine Der Spiegel reported, without citing sources.

Germany will also pledge to invest in the construction of 16,000 electric car-charging stations and to push municipalities to buy electric vehicles for their own fleets, Der Spiegel said.

In 2015, 23,500 electric and plug-in vehicles were registered in Germany. Of these, only 12,300 were pure electric cars, according to Stefan Bratzel at the Center of Automotive Management in Bergisch Gladbach.

Additional reporting by Caroline Copley in Berlin and Edward Taylor in Frankfurt; Writing by Michael Nienaber; Editing by Mark Heinrich