Germany agrees $2.3 billion aid for auto industry to navigate technology shift

BERLIN (Reuters) - Germany has agreed a 2 billion euro ($2.33 billion) aid package to help its carmakers and auto industry suppliers switch to greener engines and automated driving, according to an Economy Ministry paper seen by Reuters on Monday.

Under the programme, which is due to come into force in 2021, the government plans to distribute grants to key industry players by 2024.

It will also use the funds to promote research and development in areas including the digitalisation of supply chains, 3D-printing and the shared use of production data, and give support to so-called clusters of companies to train employees.

The government plans to cover up to 60% of the costs for large companies and 80% for small and medium-sized companies of making production facilities more environmentally friendly.

"The switch to new products, especially in the field of e-mobility, requires an adjustment of production", the paper says. "Faster innovation cycles demand more flexible production facilities. The cost pressure in production is high."

The programme is part of Germany's economic stimulus plan aimed at cushioning the effects of the coronavirus crisis.

The Economy Ministry's proposal will now be put to other ministries for consultation.

(Reporting by Markus Wacket; Writing by Caroline Copley, Kirsten Donovan)