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Italy plans $1 bln of subsidies this year to boost car industry

The automated build process of the car body.
The automated build process of the car body.

ROME: Italy is set to provide 950 million euros ($1 billion) in subsidies this year to facilitate the transition to cleaner cars and invigorate the automotive sector, as announced by the industry ministry on Thursday.

This new incentive program arises amid a dispute between Italy's rightist government and Stellantis, the owner of Fiat, over the group's production levels in the country. Last week, Prime Minister Giorgia Meloni stated that Stellantis, with major operations in France and America as well, has at times acted against the national interest.

Under the initiative, Rome will offer subsidies of up to 13,750 euros for the lowest earners, aiding them in purchasing a new fully-electric vehicle valued at up to 35,000 euros excluding VAT. A portion of the subsidy is contingent on scrapping an existing polluting combustion-engine car. Similarly, individuals in the same income group can receive a subsidy of up to 10,000 euros for a new plug-in hybrid costing up to 45,000 euros.

State-of-the-art combustion engine vehicles will also be eligible for subsidies, though at a reduced rate. Notably, these incentives are more generous than their predecessors, which amounted to a maximum of 5,000 euros for electric vehicles.

This financial commitment is part of a broader multi-year program, exceeding 8 billion euros, announced by Italy in 2022 to bolster its automotive industry.

Davide Mele, the head of corporate affairs for Stellantis Italy, expressed optimism that the package would help Italy improve its standing in the shift to electric cars and support the domestic car industry. In a meeting with government officials and unions, he emphasized the importance of stimulating demand with affordable cars, considering the tight link between production and market demand.

The Italian government and Stellantis, the country's primary automaker, have been engaged in talks since the summer regarding a long-term plan to reverse the decline in production. This plan includes an ambitious target to increase Stellantis' annual output in the country to one million vehicles, compared to approximately 750,000 vehicles in 2023.

Stellantis CEO Carlos Tavares remarked last week that Italy's spending on supporting the development of electric vehicles is less than that of other major European countries, and this approach is hindering production.__Reuters

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