Germany pledges 3 billion euros to support crisis-hit autos sector

BERLIN (Reuters) - Germany will earmark 3 billion euros ($3.56 billion) to support the development and production of climate-friendly cars as the auto industry grapples with challenges posed by the COVID-19 pandemic and global climate crisis, the government said on Tuesday.

The industry, already facing growing competition from Chinese and U.S. rivals who are widely seen as having stolen a march over Germany in electric mobility, has also been badly hit by the collapse in demand caused by the coronavirus crisis.

A central element of the scheme is the allocation of 1 billion euros to extend to 2025 a consumer rebate for buying electric cars that had been planned to end next year.

The measures mean the car industry will be well placed to rise to the challenges it faces, Economy Minister Peter Altmaier said after a summit of carmakers and government ministers held to thrash out the package.

“We want to join the path out of the economic crisis with the path out of the climate crisis,” said Environment Minister Svenja Schulze.

A further billion euros will be used for a scrappage scheme for older trucks to help private logistics companies and municipalities modernise their fleets, sources told Reuters

The planned premium would be paid when an old truck is scrapped and a brand new one is bought, even if it, too, is diesel-powered. Subsidies for electric- or hydrogen-powered trucks will be still greater, however.

The government will also establish a 1 billion euro fund to finance innovation and transformation in Germany’s leading export industry.

Reporting by Markus Wacket; Writing by Kirsti Knolle and Thomas Escritt; Editing by Maria Sheahan, Douglas Busvine and Tom Brown