The government of Germany is planning to cut the tax rate of electric and hybrid vehicles to 0.5 percent. (picture alliance/dpa)
The tax advantage planned for electric company cars will give e-mobility a boost in Germany, said the Federal Transport Minister, Andreas Scheuer.
"This can also serve to establish a used-vehicle market by making electronic vehicles cheaper and more appealing to a broad customer base," Scheuer said to dpa.
The boost to the electronic vehicle market will, however, be dependent on many factors, such as the model range, price, and charging infrastructure.
"If all the conditions are right for the consumer, the market can develop dynamically," he added.
"We urgently need German-made products available across all vehicle classes," said the minister as he urged the automotive industry to accelerate the pace of electromobility.
The German cabinet wants to pass a multi-billion dollar subsidy for businesses to use electric cars as company cars.
Currently, an employee who uses their work car privately is taxed monthly at 1 percent of the list price for the vehicle.
Under the new legislation, the tax rate for electric and hybrid vehicles would be cut to 0.5 percent.
The tax advantage will apply to electric and hybrid vehicles purchased or rented from January 1, 2019, until December 31, 2021, according to the proposed legislation made available to dpa.
The current tax laws have meant that electric cars are not attractive for companies to purchase because of their higher initial costs.
Chancellor Angela Merkel's Christian Democratic Union (CDU) and the Social Democrats (SPD) had already agreed on reducing tax rates for work vehicles in their coalition contract.
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