The German federal government has presented a new incentive program for electric vehicles (EVs), which entered into force on January 1, 2026, with the aim of re-stimulating the transition to climate-friendly mobility while simultaneously supporting households with low and middle incomes.
The program follows the abolition of national subsidies for EV purchases at the end of 2024, which led to a decline in sales throughout 2024 and early 2025.
Germany has allocated around 3 billion euros for the implementation of the program, which is expected to support the purchase or leasing of approximately 800,000 vehicles by 2029. Although the program has formally begun, applications will be accepted starting in May 2026 via a dedicated online portal, and incentives will be applied retroactively to vehicles first registered from January 1, 2026.
Eligibility for subsidies applies to private households with a taxable annual income of up to 80,000 euros, with the threshold increased by 5,000 euros per child, up to a maximum of 90,000 euros for households with two children. The program covers both the purchase and leasing of new vehicles, provided that the vehicle remains registered in the beneficiary’s name for at least 36 months after first registration.
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The base subsidy for battery electric vehicles (BEVs) amounts to 3,000 euros, while households with lower incomes and children may receive support of up to 6,000 euros. The program also includes plug-in hybrids and vehicles with range extenders (EREVs), provided they meet prescribed CO₂ emission and electric-range criteria, with maximum subsidies of up to 4,500 euros.
The German government emphasizes that the new program is part of a broader climate and industrial policy, aimed at reducing the initial costs of switching to electric vehicles, encouraging citizen participation in the energy transition, and strengthening the domestic automotive industry. The program is complemented by existing tax measures, including the extension of tax incentives for electric vehicles until 2035, as well as more favorable depreciation conditions for electric vehicle fleets in the corporate sector.
While the automotive industry has welcomed the return of incentives as an important signal for market stabilization and demand growth, some environmental organizations have expressed concerns about the inclusion of plug-in hybrids, pointing to their limited contribution to emission reductions under real-world driving conditions.
With this new, socially inclusive incentive model, Germany expects a renewed increase in the adoption of electric vehicles from 2026 onward. The relevant authorities have announced continuous monitoring of the program’s effects and consumer behavior, in order to adjust the policy as needed in the coming years.
Milena Maglovski
