The German government is planning to fund one billion Euros (US $1.4 billion) to the research and development of electric vehicles, with the ultimate goal of adding one million electric cars to the nation’s streets by 2020. The government hopes to accomplish this by providing tax rebates, dedicating parking lots and special parking lanes to electric vehicles, and increasing the use of emission-free vehicles by the government.

Currently, out of the 42 million registered vehicles in Germany, only 2,300 run on electricity. A report by the National Electric Mobility Platform, a government-sponsored council of auto industry representatives, transportation associations and unions, puts the most optimistic projections at 450,000 additional electric vehicles on German roads—less than half of the government’s ambitious goal.

Though the government is considering tax incentives exempting electric vehicle owners from road taxes for ten years, as well as creating special parking zones with free charging stations, the German government is not willing to pursue electric vehicle subsidies. “Chancellor Angela Merkel has rejected direct subsidies to consumers to promote all-electrics, which are more expensive than traditional automobiles,” Deutsche Welle reports. “Mitsubishi’s i-MiEV, one of the first electric cars to be mass-produced, costs more than 30,000 Euros – much more than similar, gasoline-powered vehicle.”

Cutting carbon emissions and improving air quality in cities will not be the only advantages of the flow of government support to electric vehicle research and development. “Unions have been in favor of government support, especially since it is estimated that 30,000 new jobs could be created by the e-car sector in the coming years,” DW reports.

But not everyone is on board with pouring government investments into electric vehicle research. Germany’s Monopolies Commission rejects state support for such research simply because it is unclear whether electric vehicles will have a future, especially with the development of newer technologies in cleaner energy vehicles.

In the meantime, German automobile companies are following suit with government investments by adding electric vehicles to their fleets of products. BMW, for example, will launch its first all-electric urban vehicle in 2013, DW reports. Similarly, Volkswagen will present an electric vehicle in two years, and Daimler will unveil an electric version of its “Smart” car later this year. On the whole, the automobile industry has pledged 17 billion Euros in investments over the next few years, DW adds.

All of these investments and policies are well in line with the goals of Transport 2050, European Commission’s comprehensive strategy to integrate Europe’s transport systems and reduce carbon emissions. Part of Transport 2050 calls for carbon-free movement in major urban centers through the elimination of all conventionally-fueled cars in cities and shifting to electric, hydrogen and hybrid vehicles by 2030. More research into electric and alternative fuel vehicles could help in accomplishing this goal.

But will the research and development of more electric vehicles actually result in the replacement of conventionally-fueled cars on the road? How will the German government ensure individuals upgrade their vehicles by 2020 especially when the newer technology vehicles cost significantly more? Looks like Germany has an ambitious goal ahead. We’re excited to watch and learn from their experience.