The tax rate of 0.25% will be applied to electric cars in corporate fleets costing up to 60,000 euros.
The incentives are aspect of a sweeping €130 billion ($145 billion) package accredited by the German governing administration late on Wednesday. With support from governments around the globe, electric cars are gaining traction with consumers. Well, the source article reports that only 3.3 percent of all new cars registered in may were electric (that's just 5,578 out of 168,148 new vehicle registrations over the course of that month).
As of March 2020, Germany had 27,730 charging stations, according to BDEW, the country's energy-industry association. Going forward, Canalis said Germany's new subsidies and the introduction of electric versions of the already popular models will help keep up with the trend.
The new stimulus package for Germany was larger than analysts had expected.
A similar improvement in fuel efficiency of gasoline powered cars has led to a reduction in the number of petrol stations.
"The lowering of VAT will hardly provide an impetus", said Peter Fuss, a partner at EY, adding electric cars were still too niche to lift the overall market. This benefits hybrid vehicles in the short term, but a staggered Carbon dioxide tax treats them as only an interim way to cut pollution. The European Union recently announced plans to fund billions to expand electric vehicle development and adoption across the continent.
In the report, energy storage specialist The Mobility House (which the Renault-Nissan-Mitsubishi alliance invests in) said that the move is a "very clear commitment to battery-powered vehicles and establishes electric mobility as a technology of the future".
Germany said it will oblige all petrol stations to offer electric auto charging to help remove refuelling concerns and boost consumer demand for the vehicles as part of its economic recovery plan.
"Internationally, this places Germany in the leading battery electric vehicle support group".
Germany plans to spend Euro 2.5 billion on battery cell production and charging infrastructure, which is an attractive field for oil majors, utilities and carmakers, with some vying dominance including Shell, Engie and Tesla.
Customer demand for electric cars has been constrained by concerns about the vehicles' limited operating range. Electric cars only made up 1.8% of new passenger auto registrations in Germany a year ago, with diesel and petrol cars accounting for 32% and 59.2%, respectively.
Diego Biasi, who is now the co-founder and chairman of Quercus Real Assets said in an interview that 97% of the reasons why people are not going for an electric vehicle is the range anxiety.