Germany is set to bring back electric car subsidies from January 2026 by launching a €4 billion (£3.4bn) programme that targets buyers of more affordable models.
The new incentive scheme, agreed by Germany’s coalition government after meetings with automotive industry officials in Berlin last week, will offer up to €4000 (£3400) towards electric cars with a net list price under €45,000 (£38,250). In a clear push towards fully electric cars, plug-in hybrids have been excluded from the programme, with eligibility requiring WLTP certified emissions of less than 50g/km of CO2.
The move follows the UK government’s recent launch of a similarly conceived Electric Car Grant, offering either £1500 or £3750 off the price of sub-£37k EVs, which is also aimed at getting more private buyers into electric cars – particularly those at the more affordable end of the market.
The German plan includes several limitations that indicate its government has learned from previous schemes. Unlike the earlier German EV subsidy – axed in 2023 – which favoured more expensive electric and plug-in hybrid models from premium brand manufacturers such as Audi, BMW and Mercedes-Benz, the new programme is set to include income caps, with eligibility limited to households earning below €45,000 (£38,250) annually.
The inclusion of used electric cars in the incentive scheme is a first in Europe and is expected to create a template for other countries considering similar subsidy measures.
The price cap favours models like the upcoming Volkswagen ID Polo and hatchback rivals such as the Renault 5, while consciously leaving out executive and luxury class cars that benefited heavily from the previous support programme.
The German government’s approach mirrors similar incentives in France and Italy, suggesting European governments are aligning their efforts to protect European car manufacturing by focusing grants on more affordable electric cars.
Funding will come from Germany’s Climate and Transformation Fund and EU Climate Social Fund, with applications handled through the Federal Office for Economic Affairs and Export Control. The grant will be paid after vehicle registration.
