Germany's automakers welcomed the government's €3bn ($3.6bn) program to boost sales of low-emissions cars, but BMW said more charging stations were needed to keep pace with the country's ambitions.
Germany earmarked the cash to help the country's key export industry tackle the coronavirus and climate crises.
German automakers already face tough competition from Chinese and US rivals in electric mobility, while demand the industry has also been hit by a collapse in demand caused by the COVID-19 pandemic.
Ola Kallenius, CEO of Daimler, welcomed the government announcement, saying the decisions were "exactly right."
Volkswagen Group CEO Herbert Diess said he was confident Germany could bolster its role as a leading e-mobility market by focusing consumer rebates on electric cars only. "The measures are working," he said, referring to earlier support that was extended in the new package.
A central element of the support is the allocation of €1bn to extend to 2025 a consumer rebate for buying electric cars that had been due to end next year.
A further €1bn will be used for a scrapping scheme for older trucks while another €1bn fund will finance innovation.
However, the new measures come amid a chicken-and-egg dispute about charging infrastructure, as well as over who should pay for it.
BMW CEO Oliver Zipse said a lack of charging infrastructure was curbing automakers' ambitions.
Germany needs to build one m charging stations each year if it wants to get 10m electric cars onto the roads within several years, he said during a discussion organized by Sueddeutsche Zeitung newspaper.
"That is now the very big challenge," he said.
Energy industry group BDEW said on 16 November that stations had been rolled out quickly this year to reach 33,107, but that many were underused as only 240,000 fully electric cars were on the road.
The group calculated that there would have to be 550,000 electric cars to make the existing infrastructure profitable.
BDEW said the financial burden fell too heavily on utilities which built 80% of the total.
Diess said on 16 November that Volkswagen would meet emissions goals for 2021 thanks to a mass-production push of electric vehicles, with German factories in Emden and Hanover converted to build electric cars as part of €73bn ($86bn) investment plan.
BMW has said it plans to offer 25 electrified models by 2023, with more than half being fully electric, and expects their sales to rise on average by 30% a year until 2025.
Zipse said that as long as charging facilities were being rolled out, combustion engines would still be needed. To play off them off against batteries resembled a "bipolar world," he said.