A fateful decision for Spain: Another COVID-19 recovery package supporting electric vehicle uptake?

A few days ago, the German government agreed to a €130 billion COVID-19 economic recovery package.

A significant portion of that stimulus, about €8 billion, is earmarked for the automotive industry in Germany. Previously, President Emmanuel Macron announced a similar €8 billion COVID-19 support package for the automotive industry in France. Next in line is Spain, where a decision by the government about support for the automotive industry is expected any day.

The French and German programs include additional support for electric vehicles. In France, the purchase premium for battery-electric vehicles (BEVs) will increase from €6,000 to €7,000 for vehicles with a purchase price of up to €45k. Plug-in hybrid electric vehicles (PHEVs) will be newly eligible for a purchase premium of €2,000. In Germany, the government subsidy for BEVs will double from €3,000 per vehicle to €6,000 for vehicles under €40k, and from €2,500 to €5,000 for vehicles costing between €40k and €65k. For PHEVs the government subsidy will also double from €2,250 to €4,500 for vehicles costing up to €40, and from €1,875 to €3,750 for vehicles between €40k and €65k. In addition, manufacturers remain obliged to pay an additional purchase premium of €2,500 to €3,000 for BEVs and €1,875-€2,250 for PHEVs.

The German government decided to send an even stronger signal for a quick transition to electric vehicles by not including any purchase premium for combustion engine vehicles. Furthermore, it decided to strengthen the CO2-based portion of the vehicle ownership tax. In France, on the other hand, buyers of a new or used combustion engine vehicle can benefit from a conversion premium. However, this subsidy in France is capped at €3,000, is only available for low-income households, and is and limited to a maximum of 200,000 vehicles with emissions below 137 gCO2/km (in WLTP-terms) that replace a vehicle that is at a minimum 9-years-old. Although this policy will have a negative effect on the French vehicle fleet CO2 emission level, as we explain here, this effect is likely to remain limited.

Read more: The ICCT

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