The race towards electrifying the roads is on, and for the most part, Europe has been ahead of the pack. Several countries around the globe have set timelines to ban the sale of new internal-combustion-engine (“ICE”) vehicles; most of those countries are in Europe, including France, Germany, Norway, the Netherlands and Denmark, among others. In September, California Gov. Gavin Newsom announced that by 2035, every new car sold in the state would be emission free, a move that could make California one of the largest electric vehicle (“EV”) markets on the globe.
Germany, however, is poised to surpass California, home to pioneering EV maker Tesla, as the largest EV market this year. According to a report by Schmidt Automotive Research from Berlin, drivers in Germany purchased 98,370 electric cars over the first nine months of 2020, more than a third of the EVs sold in California. This increase in pure electric vehicle sales can be attributed to a slew of recently extended purchase incentives by the government.
In most markets, electric vehicles are too expensive for consumers to buy outright, so authorities have taken to offering purchase incentives to lower the initial cost of purchasing an EV. Germany was already the largest market for electric vehicles in Europe after edging Norway out of the top spot in 2019, although Norway remains the country with the highest per-capita EV penetration in the world. Germany’s incentive program differs from most programs in Europe as it involves subsidies from both the government and the auto industry.
The German government initially offered a €4,000 ($4,863) discount for EVs with a starting price of less than €60,000 ($72,945) with half of the discount being covered by the auto industry. The incentives program was updated in 2019, with electric vehicles that cost less than €40,000 ($48,630) receiving a €6,000 ($7,294) discount and those going for between €40,000 and €60,000 getting a €5,000 ($6,079) discount. As part of a €5.9 billion ($7.172 billion) post-pandemic stimulus package to stimulate growth in the auto industry, the government updated the EV incentives program again.
Now electric vehicles that cost less than €40,000 get an extra €3,000 discount from the government, bringing the total subsidy to €9,000. EVs that are poised to benefit the most from this discount include Tesla Model 3, BMW i3, Peugeot 208 Electric, Hyundai Ioniq Electric, Hyundai Kona Electric, Kia Nero Electric, Renault Zoe and the yet-to-be-delivered Volkswagen ID.3.
Still on the topic of California’s EV industry, one global fintech company called Net Element (NASDAQ: NETE) is taking steps to merge with California-based EV manufacturer Mullen Technologies Inc. The resulting company from this merger will be interesting to watch.
NOTE TO INVESTORS: The latest news and updates relating to Net Element (NASDAQ: NETE) are available in the company’s newsroom at http://ibn.fm/NETE
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