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France and Germany lead EU countries in delivering green stimulus packages; increasing EV subsidies

France and Germany have announced plans for major green stimulus packages as the countries emerge from lockdown and seek to get their economies moving again. Other EU countries, including Spain and Holland have also announced revitalization plans with strong green elements.

France has announced an automotive industry bailout package worth €8 billion ($8.8 billion), including substantial support for electrification.

The purchase incentive for battery electric vehicles (BEVs) and fuel cell vehicles (FCVs) increased from €6,000 to €7,000, as of June 1. For fleet buyers, (which accounted for over 50% of the French market in 2019), the bonus for buying a plug-in vehicle rose from €3,000 to €5,000. (Subisidies are lower for EVs priced at over €45,000 and zero for those over €60,000.) PHEVs with a range of over 50km also have increased support under the French plans.

Meanwhile, the German Government has also unveiled a stimulus package that supports vehicle electrification. The country is also reported to be planning the introduction of a climate protection surcharge which would double motor vehicle tax for cars emitting more than 195g/km CO2.

The overall German package, which is expected to cost €130 billion over the next two years, includes a cut in the country’s VAT rate.

The legislation establishes a €50 billion fund for “addressing climate change, innovation and digitization.”

The current EV incentive of €3,000 will be doubled to €6,000 for new cars costing less than €40,000. The price limit to receive adjusted tax benefits for EVs will be raised from €40,000 to €60,000, and an existing EV tax exemption will be extended from 2025 to 2030.

The German Government has also announced a national hydrogen strategy, with plans to ramp up production capacity to 5 GW by 2030 and 10 GW by 2040. By 2030, Germany aims to have generators with a total capacity of up to 5 GW, which corresponds to hydrogen generation of about 14TWh.

Hydrogen will be used first where processes cannot be electrified—for example, in heavy goods transport, steel production, the chemical industry and aviation. Companies in these sectors will receive financial support if they invest in electrolysis plants to transform their production processes.

Germany’s environment minister did not originally envisage the use of hydrogen in the transport sector. However, there are now plans to support the development of infrastructure for hydrogen refuelling.

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