German auto industry could get €2bn in aid

The German government could be about to pour two billion euros’ worth of aid into its struggling automobile industry, with suppliers standing to benefit the most.

The aid programme presented by the federal government looks beyond COVID recovery and aims to support the industry in switching over to climate-friendly and automated cars. The money would be delivered mainly in the form of investment grants by 2024.

This springs from recently unveiled regulations that are now being agreed between the Government and the Federal Ministry of Economics, which is voting on the €2bn aid plan.

As well as suppliers, research and development organisations and projects are also singled out to receive special support under the plan, with a particular focus on speeding up digitisation.

A third focus of the plan is on training the millions of workers who will need new skills for the new auto industry. Companies, especially suppliers, will be eligible for funding when they partner with other companies in the industry to train and qualify their employees.

The plan is for the programme to come into force next year. Here’s how the grants are expected to break down:

• Investments in new environmental protection systems: large companies can receive 60% of the cost, while small and medium companies can get 80%.
• Advice and training: large companies can claim 50% of the cost, small and medium companies 80%.
• Alternatively, companies can apply for small grants (a maximum of 800,000 euros) within EU regulations.

Possible areas for investment mentioned in the plan include digitising supply chains, 3D printing, and production data sharing. It highlights that production needs to be adapted to make the shift to new products, especially electric vehicles. The more innovation speeds up, the more flexible the production systems need to be, which leads to high-cost pressures.

Supplies in Germany’s auto industry recently requested further aid from the federal government. The two billion euros available now were already anchored in Germany’s COVID stimulus package.