The German government and car industry have agreed to increase joint subsidies for the purchase of electric cars on the same day automobile giant Volkswagen began production of a new all-electric vehicle.

The agreement between the government and the automobile industry was reached following a Monday evening "car summit" aimed at fostering the mass production of cleaner transportation. 

Read more: Electric cars — when will the stars align?

Under the agreement, consumer subsidies for electric cars costing less than €40,000 ($44,500) will increase to €6,000 (about $6,700) from €4,000. Purchasers of plug-in hybrids in this price range would be given a subsidy of €4,500, up from €3,000.

For electric cars over €40,000, there will be an increase in the subsidy by 25%. Any car priced over €60,000 will not supported by the scheme.

Industry and government will evenly split the cost of the subsidies. The subsidies will also be extended from the end of 2020 to the end of 2025.

In addition to the subsidy issue, the two sides discussed ways to expand infrastructure for electric cars.

VW launches new electric car

Chancellor Angela Merkel's office said the government would invest €3.5 billion to expand electric car charging stations. The target is for 50,000 publicly accessible charging stations nationwide by 2022, compared to 21,000 today. That figure is far short of the 1 million electric car charge points Merkel has said she wants across the country by 2030. 

Monday's announcement came as Volkswagen began mass production of its ID.3 electric car. Starting in 2021, the company plans to build only electric cars at its factory in the eastern town of Zwickau — as many as 330,000 electric cars each year.

cw/cmk (dpa, Reuters)

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