The Czech government has started to support companies that want to buy electric cars financially but electric vehicle subsidies are inefficient and Germany is an example of that. Despite Germany’s difficulties, the pressure to introduce subsidies will increase substantially across the EU as electric cars fail to sell.
The appeal of the Czech Ministry of Industry and Trade states that businesses can receive a subsidy of up to 40 percent of the purchase price of a new electric car.
“The appeal focuses primarily on the purchase of utility vehicles, cars of the M1 category will be subsidized up to 30 percent of the purchase price and up to a maximum price of 1,250,000 korunas (€49,500 thousand), VAT excluded,” the ministry stated.
Overall, the ministry wants to redistribute subsidies worth 50 million korunas (€1.9 million). This means that a maximum of about one hundred new electric vehicles will appear on Czech roads. The effect of this step is, therefore, close to zero, and is equal to putting 50 million korunas on a pile and setting them on fire.
Although Prime Minister Andrej Babiš said at the beginning of last year that the government will not support the purchase of electric cars, the pressure to introduce such subsidies was stronger and will continue to increase throughout the EU as the electric cars sales fall.
Currently, this trend has already started, given the pace that electric car sales are falling short of expectations.
An article by the German daily Die Welt states that Mercedes, for example, sold only 55 of the EQC electric SUVs in Germany last year. While 3.6 million cars were sold in Germany from January to November 2019, only 57.533, or 1.6 percent of them, were fully electric.
This poor result is an example is coming from an automobile market generously supported by a government pushing consumers to purchase electric vehicles and has plans to do so even more in the future regardless of how unsatisfying the results are.
In this context, it is also worth noting that the German automotive industry will likely face a negative impact caused by massive penalties for failing to meet emission targets.
If we would want to visualize the results of such subsidies, we can remember the Czech experience with the support of solar power plants. And indeed, Andrej Babiš recently pointed to this matter when he stated that the annual cost of solar energy reaches 30 billion korunas (€1.18 billion).
Babiš complained that the government could use the money on different projects.
Perhaps it would be good to keep this whole issue with solar power plant subsidies, approved by the Green Party, in mind and not repeat the same mistakes. Electric vehicle subsidies are inefficient, just like the solar power ones taxpayers are already subsidizing.