While Europe has been the land of small diesels for decades, air quality concerns and consideration of fossil fuels’ impact on global warming has led EU nations to offer incentives to purchasers of electric vehicles. In recent weeks, the UK and Germany have announced further steps in that direction.
The UK Extends Grants and Announces New Infrastructure Improvements
The UK has had in place a £5000 grant for purchasers of certain hybrid and electric vehicles, but the grant expires in March 2016. To keep up interest in these cars, the UK government has announced that for vehicles that meet stringent new requirements—namely, cars capable of plug-in charging, that emit less than 50 grams of carbon dioxide per kilometer, and are capable of traveling 70 miles in zero-emission mode—a grant of £4500 will be available until at least March 2018. Cars with shorter zero-emission ranges will be eligible for up to a £2500 grant.
In a move that may signal a long-term shift from individual grants and rebates and toward making sure that electric vehicles are an attractive product in their own right, the UK has also announced the winners of a “Go Ultra Low” contest, in which cities with urban centers proposed funding various infrastructure improvement projects. The UK has made £40 million in funding available for these cities, which will use the funding to put in place electric car-friendly measures like free parking for electric cars, street lights that double as car chargers, and short-term lease or loan programs to allow consumers to try electric cars for a short time before committing to a purchase. These changes are estimated to provide a further £1300 worth of benefit to owners of plug-in electric vehicles, on top of the grants already in place.
Given that sales of cars eligible for the original £5000 grant experienced a 386% year-over-year increase in the first quarter of 2015, this market is clearly already growing in the UK. By embracing a new grant program, and investing in a variety of infrastructure improvements, the UK is taking steps to keep this momentum going.
Germany Considers Joining the Incentives Club
Meanwhile, the German government is considering enacting a 5000 euro incentive for purchases of certain hybrid and electric vehicles. This is still in the preliminary stages, and it is unclear where all of the funding will come from—Chancellor Angela Merkel will be meeting with auto industry executives this week to determine whether they could co-finance such an incentive. While the German government has long had a goal of having 1 million electric cars on the road by 2020, Germany has to date eschewed such direct rebates and grants, focusing instead on more indirect tax incentives and funding research on electric mobility. Putting cash on the table, as shown in the UK, may be an additional way to jump-start sales in this segment for one of the world’s largest markets for car sales, and the home of several manufacturers.