Subsidies at risk
Budget crisis can hit car manufacturers hard
November 27, 2023, 7:02 p.m
Possible consequences of the federal government’s tight budget are causing discontent at the car summit in the Chancellery. Because the climate and transformation fund, which was supposed to finance industrial policy measures, is in jeopardy. The automotive industry is afraid of falling further behind in e-mobility.
Business and government representatives demonstrated unity in the expansion of e-mobility at the car summit in the Chancellery. The participants agreed that the goal of 15 million fully electric cars on Germany’s roads by 2030 must be implemented quickly, explained government spokesman Steffen Hebestreit. However, the meeting was overshadowed by the budget crisis following the Federal Constitutional Court’s ruling on the Climate and Transformation Fund (KTF).
“The participants welcomed the measures to promote the development of semiconductor and battery production capacities,” explained Hebestreit. However, many of the traffic light government’s industrial policy projects – from subsidizing electricity prices for energy-intensive companies to billions in payments for the establishment of battery and chip manufacturers – are in jeopardy as a result of the KTF ruling.
Chancellor Olaf Scholz invited associations from the automotive industry, domestic and foreign car manufacturers and suppliers as well as representatives of other sectors such as battery cell producers and semiconductor manufacturers to the Chancellery. The focus was on e-mobility and the production of cheaper e-cars. From the government side, the ministries of economic affairs, labor, transport, environment and finance were represented.
Lack of charging infrastructure and high electricity prices
Volkswagen CEO Oliver Blume had previously warned that the federal government’s electric car goals would fail. “The ramp-up of electromobility in Germany and Europe is going slower than was expected a few years ago,” he told the “Augsburger Allgemeine”. The main reasons for the development are poorer general conditions such as the high electricity price, expired purchase incentives and a lack of charging stations.
The supply and production of vehicles would “not be a possible bottleneck in achieving the coalition’s goal,” explained Hildegard Müller, President of the Association of the Automotive Industry (VDA). She also sees the problem as being primarily due to the lack of charging infrastructure and the high price of electricity.
The government has pushed ahead with the expansion of the charging infrastructure at full speed, said Federal Transport Minister Volker Wissing. “There are currently around 100,000 publicly accessible charging points in operation in Germany. That is twice as many as two years ago,” he told the “Handelsblatt”. Above all, he held the manufacturers responsible.
BUND calls for vehicle tax reform
“It is crucial that broad sections of the population can afford clean mobility,” explained Marie-Luise Wolff, President of the Federal Association of the Energy and Water Industry (BDEW). For this purpose, the environmental organization BUND called for a fundamental restructuring of the tax and subsidy system. Large, heavy and energy-intensive vehicles should no longer be supported, said BUND car expert Jens Hilgenberg to the editorial network Germany.
At the same time, regulatory measures are needed so that “vehicles with low energy and resource requirements that are affordable for average earners” come onto the market more quickly. Hilgenberg, for example, called for the abolition or at least massive changes to company car taxation and a reform of vehicle tax towards a system that taxes high-horsepower combustion engines more heavily.