Chancellor Angela Merkel reaffirmed her target to bring one million electric cars on to German roads by the end of the decade, despite evidence of dwindling consumer interest.
"You have a chancellor who believes in electromobility," she told a conference to promote electric car technology, less than 24 hours after the collapse of an Israeli electric car company.
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Fewer than 3,000 electric cars were sold in Germany last year out of a total market that exceeded 3 million.
The German auto industry plans to invest roughly 12 billion euros ($15.5 billion) in the next three to four years in alternative powertrains, including battery-powered electric cars, according to the president of industry association VDA.
"Driving electrically is no vision anymore, it's a reality," said VDA's Matthias Wissmann.
Yet economy Minister Philipp Roesler refused to adopt the approach of China, France and the United States, which subsidize purchases of electric cars to boost demand.
Once hyped as a technology that would crowd out conventionally-powered cars, electric auto sales have flopped due to high costs and range limitations.
A survey by Germany's motoring club ADAC said drivers are much more skeptical about the technology than two years ago and nearly half are unwilling to pay extra for an electric car.
TESLA RARE SUCCESS
"We actually lose money with each Ampera we sell, because the technology is too expensive," said Karl-Thomas Neumann, chief executive of General Motors' unprofitable unit Opel.
Last year, the GM brand sold 5,300 Amperas out of 1 million cars, making it the best-selling passenger car running on electricity in Europe, according to the company.
The low interest in Germany is echoed by problems elsewhere.
U.S. electric car battery maker A123 filed for bankruptcy and cash-strapped Fisker Automotive is in talks to sell itself to a new owner.
On Sunday, Israeli charging station provider Better Place filed a court motion to liquidate.
Renault, which partnered with Better Place to set up a battery swapping network in Israel and Denmark, said the move did not call into question its own electric vehicle strategy, one of the most aggressive.
Upstart electric car maker Tesla has been a rare success story, posting its first-ever quarterly profit.
(Reporting By Christiaan Hetzner and Andreas Cremer; Editing by Noah Barkin and David Cowell)