Governments charge up EV manufacturing

The higher sales costs of electric vehicles are, in many countries, offset by governments to make the purchase price competitive.

Several European countries have boosted their electric vehicle incentives as part of stimulus packages to create manufacturing jobs and revive economies that have slowed dramatically during COVID-19 lockdowns.

It ties in with a European Union edict that the average emissions of all vehicles sold by a manufacturer should not exceed 95 grams of carbon dioxide for every kilometre travelled from 2021, a target that is being phased in during this year.

In Germany, the government will double existing subsidies to €6000 on electric vehicles that cost up to €40,000. With existing contributions from some manufacturers, purchase incentives could be as much as €9000.

Potential electric car buyers will also benefit from a temporary reduction in the country’s sales tax to 16% from 19%, a reduction that will not apply to diesel and petrol cars that cannot achieve a fuel consumption rate of 41 miles per US gallon.

The incentives are part of the German government’s €130 billion stimulus package announced in June. Subsidies for electric cars are expected to cost €2.2 billion, while carmakers and their suppliers will receive another €2 billion to aid research and development.

Germany’s response came after France announced an  for cars valued up to €45,000 for private buyers from June 1, while for commercial purchases the incentive rises to €5000.

Other measures from the French Government include:

• For electric vehicles that cost between €45,000 and €60,000, the bonus is €3,000.
• Anyone who earns less than €18,000 a year, decommissions their old combustion engine and procures a new e-car can also expect a bonus of €5,000 as part of the “prime à la conversion”, i.e. they receive a total of €12,000 euros from the State for the procurement of a purely electric car.
• For plug-in hybrids, there is a bonus of €2,000 euros from an e-range of 50 km and a list price of up to €50,000 euros, and the number of charging points in France is to be tripled to €100,000 by the end of 2021.

Greece is also making a big push to change the way its citizens buy cars.

With the penetration of electric vehicles at less than 1%, the Greek government will invest in charging infrastructure and grant extensive tax breaks in pursuit of its goal to have one in three new vehicles to be electric by 2030.

• Electric cars and light commercial vehicles – subsidized by 15% of the purchase price.
• Electric taxis – the state will cover 25% of the costs.
• Electric cars will be exempt from parking fees for two years.

The UK is in a transition period after leaving the EU at the start of the year but its stated aim is to pursue a regulatory approach “that is at least as ambitious as the current arrangements for vehicle emissions regulations.”

The British government plans to ban the sale of all vehicles with internal combustion engines, including plug-in petrol-electric hybrids, by 2035 – or even sooner.

“We’re advising retail networks to think proactively, not just short-term immediate charges, but also looking at 2023, 2025, 2030,” says Steve Freeman, the head of MHA Macintyre Hudson’s Automotive Consultancy and Baker Tilly’s International Automotive team.

“If you look at the UK market, the current ban on petrol and diesel vehicles is 2035 but we are hearing that change will be brought forward to 2030.

“For dealers that are not thinking out to 2025, 2030, there’s the potential that they will incur a lot of infrastructure investment costs now, including potentially digging up the car park to lay wires and they will need to look at it again in five, seven, 10 years’ time.  We are advising our clients to future proof this infrastructure investment activity as far as possible now and avoid having to repeat it.”

Mr Freeman says the demand for electrics and energy is expected to increase in a big way, because the sheer growth in numbers of EVs, which is why dealers need to move now.

“If you go to the Distribution Network Operators proactively and as early as possible, financially you’ve got more chance of getting a reasonable quote from them in terms of providing that additional supply,” he says.

“As soon as it gets to that tipping point, then the network operators need to invest considerably in things like substations and other infrastructure.

“Anyone that picks up the tab post that tipping point, they will potentially get a share of the new infrastructure process and they’ll get charged by the network operator.”