https://www.reuters.com/business/autos-transportation/german-cabinet-agrees-proposals-tax-relief-evs-source-says-2024-09-04/

German government agrees proposals for tax reliefon EVs

By Reuters

September 4, 20242:29 PM GMT+2Updated17 hours ago

A Tesla car being charged at a Tesla electric vehicle chargingstation in a car park of the A10 shopping center in Wildau nearBerlin, Germany, March 20, 2024. REUTERS/Annegret Hilse/File PhotoPurchaseLicensing Rights

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BERLIN, Sept 4 (Reuters) - Germany'scoalition government has agreed to a proposal for tax reductions topromote the use of electric cars, after last year abruptly ending asubsidy programme designed to help speed up the green transition.

Germany, Europe's largest economy, isaiming to improve the uptake of EVs, new registrations of which fellby 36.8% in July year-on-year, official data show. Apart from EVs'affordability, German consumers have been concerned about a lack ofsufficient charging stations and the range of electric vehicles.

Under the draft approved by ChancellorOlaf Scholz's cabinet on Wednesday, companies would be able to deductup to 40% of the value of newly purchased electric and qualifyingzero-emission vehicles from their tax bill in the year of theirpurchase, falling progressively to 6%.

The government estimates that themeasure will have an average annual cost of about 465 million euros($514 million) between 2024 and 2028.

Additionally, electric andzero-emission company cars that are worth 95,000 euros or less willnow qualify for preferential tax treatment, up from 75,000 euros orless previously, according to the proposal that will now go toparliament.

Economy Minister Robert Habeck said onTuesday that the government would continue to support the German carindustry's transition to EVs after Volkswagen (VOWG_p.DE)

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saidthat it might close plants in Germany for the first time in thecompany's history.

The new measures are part of thegovernment's package to stimulate economic growth.

Environmental and social groups hadearlier doubted that the measures would boost EV sales and criticisedthat the money would mainly benefit top earners.

Auto industry association VDA meanwhilehailed the government's plans.

"This is an important and correctsignal that is urgently needed, especially given the abruptdiscontinuation of the environmental bonus at the end of last yearand the weaker demand for electric vehicles," VDA said onWednesday.