Volkswagen CEO Herbert Diess welcomed a German government climate package that aims to reduce CO2 emissions with measures such as higher incentives for electric cars.
The plan will increase incentives for EVs costing less than 40,000 euros starting in 2023 while conventional cars will become costlier to operate, with higher taxes for more polluting vehicles. Gasoline and diesel prices will rise.
Diess said the package is a positive signal that confirmed the automaker's own strategy.
"We need a change in the system for electric mobility. The car will lose its negative characteristics in the years ahead. It will be quiet, safe and clean. The climate package contains important decisions on its expansion," he said.
VW's 12-brand group, which includes Audi, Porsche and Bentley, plans to introduce almost 70 full-electric models globally by 2028, accounting for 22 million battery-powered vehicles. The automaker's EV push started at this month's Frankfurt auto show with the launch of the ID3 compact hatchback, the first of a new generation of mass-market battery-powered cars.
Germany's latest climate package comes after Chancellor Angela Merkel has faced a series of protests this year demanding action to stem emissions. Germany's Green party has surged in the polls as the impact of global warming becomes increasingly tangible, with forests fires more frequent and droughts causing the Rhine river to recede.
The plan will add a little more than 1 euro ($1.10) to the cost of filling the average size tank, according to Bloomberg calculations based on European Union data. That cost will increase to a range between 4 euros and 6 euros starting in 2026.
Diess said the government was right to increase prices for gasoline and diesel fuel slowly to protect low-income earners, commuters and small businesses.
However Germany's MWV oil lobby group registered its displeasure at the fuel price rises. The goal should be "to make fuels cleaner" rather than increasing pump prices. it said.
The 54 billion euros ($60 billion) package's other key initiatives include:
- Air to Rail -- Taxes will be increased for flights and decreased for rail tickets, and state rail operator Deutsche Bahn will get an extra 1 billion euros a year in capital to build up the country's rail infrastructure and public transport.
- Building Upgrades -- The government will offer grants and tax rebates for installing new furnaces, windows and insulation and will ban new heating oil furnaces from 2026.
The deal between the government's coalition partners was reached after more than 16 hours of overnight negotiations that began Thursday evening in Berlin.
Germany's leaders were under pressure to seal a deal, with the country falling far short of its climate goals.
Tens of thousands of demonstrators gathered to march in Berlin, Hamburg, Munich and around 500 other locations across Germany as part of the Fridays for Future movement. Finance Minister Olaf Scholz said the demonstrations have been a "wake-up call."
Merkel said Germany will continue to evaluate the program to ensure the country meets its targets to reduce carbon-dioxide emissions
"We have created numerous incentives, so that people can behave in a more environmentally responsible way," said Merkel. "We believe we can reach these targets."
Germany does not expect the plan to require the government to raise more debt. The costs for incentives such as promoting electric vehicles and upgrading older furnaces will be balanced by income from carbon-dioxide certificates.
About 480,000 electric and hybrid vehicles are on the road in Germany, well short of the target of 6 million that Merkel has set for 2030.
Bloomberg and Reuters contributed to this report