(Bloomberg) — The European Union is working on a proposal for bloc-wide purchase incentives for electric vehicles to support the bloc’s struggling automakers, German Chancellor Olaf Scholz said Tuesday.
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Speaking at the World Economic Forum in Davos one day after US President Donald Trump took office, Scholz said Europe’s response to a growing number of global challenges must be an economically stronger Europe with more competitive industry and less bureaucracy.
“What we need are pragmatic solutions, not ideological ones,” he said. “And that is why I am delighted that the president of the commission has now taken up my proposal for harmonized Europe-wide purchase premiums for e-cars,” he added, referring to the European Commission.
With Europe’s car industry sagging in part because of low demand for EVs, Trump presented a new challenge by ordering his administration to consider eliminating subsidies and other policies aimed at accelerating the adoption of cleaner cars in the US.
Scholz insisted Tuesday that “e-mobility is the future, there is no doubt about that. Anyone who suggests otherwise is damaging our industry.” The center-left leader is facing snap elections next month.
In its election program, Scholz’s Social Democratic Party is proposing a “temporary tax deduction” to promote the purchase of EVs produced in Germany.
European Commission President Ursula von der Leyen has so far insisted the EU will stick to its legal target of phasing out combustion-engine cars by 2035.
“The next few years will be vital to stay in the race of clean and disruptive technologies,” she said Tuesday in a speech at Davos. “Europe has everything it needs to make this happen.”
Commission spokespeople didn’t immediately respond to a request for comment on Scholz’s remarks.
Turning to Trump, Scholz recommended Europeans to keep “cool heads” and tackle transatlantic relations with a fair dose of self-esteem.
“Not every press conference in Washington, not every tweet should immediately plunge us into agitated, existential debates,” Scholz said. The US remains Germany’s closest ally outside Europe even after the change of government in Washington, he added. “I will do everything in my power to ensure that this remains the case.”
Scholz spoke out against protectionism and made the case for keeping free trade as a foundation of future growth.
“Isolation costs prosperity. We will defend free trade as the basis of our prosperity together with other partners,” Scholz said. He plans to discuss a joint approach with European allies, including French President Emmanuel Macron, who Scholz is meeting for talks in Paris on Wednesday.
–With assistance from Jorge Valero.
(Adds details on German incentive prosposal in sixth paragraph)
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