German automakers breathe again as new coalition shuns sweeping policies

German automakers heaved a collective sigh of relief on Friday as a new tripartite coalition government appeared to refrain from sweeping action that could have led to an earlier-than-expected demise of sales of new internal combustion-engine vehicles ( ICE).

Environmentalists did not like the failure to permanently eliminate the lack of speed limits in Germany on some highways and wanted higher taxes on ICE cars. The industry feared a commitment to end the sale of new ICE cars by 2030. The new government wants to advance this end date from a European Union proposal of 2035, but did not add details. Britain has already pledged to end sales of new ICE cars by 2030, but so far no other major European producer has followed suit

The German federal elections of September 26, using proportional representation, produced an inconclusive result. It took 2 months to negotiate the terms of a coalition government, but it was about 4 months faster than the last government led by outgoing Chancellor Angela Merkel.

The coalition government, between the center-left Social Democratic Party of new Chancellor Olaf Scholz, the Greens and the liberal FDP, has announced a target of 15 million battery-electric vehicles on German roads by 2030.

That’s the equivalent of around 1.6 million new BEVs per year, implying a BEV share of well over 50% by the end of the decade, according to the investment bank. UBS.

The current BEV government grant of up to € 9,000 ($ 10,200) will be maintained until at least 2025. The coalition government also aimed to ensure that there would be 1 million charging points in Germany by 2030 and that the energy would be 80% renewable. Currently, coal provides 24% of Germany’s electricity, casting a shadow over its claims to be green. Coal will “ideally” be phased out by 2030 compared to the previous government’s target of 2038.

According to Reuters, Bmw liked the new proposals, especially the load plans. Daimler was impressed too.

“When I first walked through the coalition deal, I liked the sound of three numbers: 15 million electric cars, 1 million charging points and 80% renewable energy,” Ola said. Kaellenius, CEO of Daimler, quoted by Reuters.

The reaction in the stock market was difficult to understand, as prices plunged across the world amid renewed fears of a sudden spread of the coronavirus threat. The German stock market as a whole, as measured by the DAX index, fell almost 3%, while the EURO STOXX Auto 600 slipped almost 5%. BMW was listed at € 86.38, down 5.2% and Daimler at € 83.67 down 5.3% by mid-afternoon. VW fell only 2.5% to € 261.6, perhaps reflecting its leadership role in electrification.

Brussels-based environmental lobby group Transport & Environment was disappointed with the deal. He wanted a target of BEV 21 million by 2030 – “if Germany is to meet its decarbonisation targets in transport” and didn’t like the plan to allow synthetic fuels in ICE engines.

“Conventional cars that run on electric fuel consistently emit more CO2 (carbon dioxide) than equivalent battery-powered electric cars and electric fuel production also requires 5 times more energy than direct electrification,” T&E said, citing his own report.

The coalition will make plug-in hybrids less attractive, with subsidies only applying to vehicles with at least 50 miles of electric-only range from August 2023. The current range of the electric-only PHEV is around 30 miles. .

UBS felt the government’s new plans would be good for electrification.

“Overall, we believe the new government sets the framework for an almost all-electric future in 2030, including the push for infrastructure and a low-carbon electricity mix,” UBS said in a report.

“The roadmap for EV subsidies is clear and completely sufficient, in our view, and the framework will help further accelerate the shift in consumer preferences towards EVs. An ECI phase-out date has not been set and is not even necessary, in our opinion. (manufacturers) with an all-inclusive BEV strategy and limited reliance on PHEV are the clearest beneficiaries of this treaty, Tesla

TSLA
, the VW group and Daimler above all, ”the report states.