It may only be two weeks since Germany’s Chancellor Merkel announced that her government would help bring 1 million plug-in vehicles to the roads of Germany by 2020 but her bold goal is already being dismissed as impossible by the very automakers her Government is planning to help. 

Enter Daimler CEO Dieter Zetsche.

Talking to the German Bild newspaper earlier this week Zetsche was far from welcoming of the German government’s electric vehicle program, which includes $1.4 billion investment in electric vehicle research and development. 

Why?  It lies in the lack of purchase subsidies for electric cars. Unlike the U.S. and most of Europe, Germany doesn’t offer purchase grants or even tax credits for those buying electric cars. 

Smart ForTwo ED

Smart ForTwo ED

According to Zetsche, that’s where the problem lies. While automakers know already know how to make electric cars, electric car sticker prices are still prohibitively expensive for most car owners. 

With cars like the 2011 Smart ForTwo Electric Drive costing well over twice the price of its gasoline counterpart and no purchase incentives, Zetsche predicts an extremely low take-up rate. 

He has a point. Electric cars are currently more expensive than their gasoline counterpart, partly due to the costs of expensive lithium ion battery packs but also the economies of scale. 

Mercedes-Benz SLS AMG E-Cell

Mercedes-Benz SLS AMG E-Cell

Right now, there simply aren’t enough electric cars being made in order for costs to be kept low. Very few automakers are willing or able to subsidize electric cars in order to make them truly price-competitive with gasoline cars on sticker price alone, so Zetsche argues that buying incentives and subsidies for the purchase of electric cars are essential. 

Without additional consumer incentives, Zetsche claimed at best only 500,000 electric vehicles would exist on the roads of Germany unless some form of purchase incentives were implemented by the German government. 

Are incentives essential to the uptake of electric cars? Or should early-adopters pay a premium for being among the first to switch to electric cars? Let us know in the Comments below. 

[Bild via AutoNews]