In an effort to increase EV sales in the country, Germany’s economy ministry wants to extend subsidies for new electric cars until the end of 2020, draft guidelines seen by Reuters on Thursday showed.

The government is in attempts to boost demand for EVs in the country in response to a diesel emission cheating scandal that has engulfed its auto industry, notably VW but also other including Daimler in the last three years.

The document, drafted by the economy ministry, has been sent to other German ministries for further approval. Incentives worth $4,500 on the purchase of a new electric car in Germany which was introduced back in June 2016 are due to end in June. The draft envisages an extension until Dec. 31, 2020, in largely its current form.

German Extend EV Subsidies

The government is in attempts to boost demand for EVs in the country in response to a diesel emission cheating scandal that has engulfed its auto industry.

While the government and automakers shared the financing, the $1.3 billion earmarked have not been used. A few of the estimates show that less than $562 million have been taken up. The subsidies have sure helped lift sales but even so, electric cars made up only about 1 per cent of new car registrations in 2018.

The economy ministry declined to comment and referred to previous statements that it would soon communicate details of the incentive program’s future.

Apart from providing incentives for buyers, earlier in November last year, the German government also invested about $1.2 billion towards local EV battery developers to push electrification in the region. Funds worth $1.2 billion to support a consortium aiming to produce electric car battery cells along with a research facility to develop next-generation solid-state batteries, were granted.

Electric Vehicle Charging

While the government and automakers shared the financing, the 1.2 billion euros earmarked have not been used.

Reuters reported that the move was aimed at reducing the country’s automaker’s dependency on Asian electric vehicle battery suppliers and to protect local jobs which were at risk of shifting away from combustion engines.

Automotive industries in Germany play a vital role in its economic status, hence, ensuring primary contribution from local companies could be crucial. However, experts suggest that Germany’s entry into the scene would be expensively late considering that the Asian markets have already ramped up their production creating a risk of glut.