Germany Plans €5,000 Incentive for EV and Plug-in Hybrid Cars for Low & Middle-Income Buyers

Germany plans to introduce a new purchase incentive of up to €5,000 for electric cars and plug-in hybrids next year, but it will be aimed only at private households with “low or middle incomes.” The decision was announced by the coalition committee of the CDU/CSU and SPD on Friday night. A total of €3 billion has been allocated, enough to support roughly 600,000 vehicles.

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The new incentive is intended to boost demand for low-emission vehicles and promote a shift toward climate-friendly mobility. “Specifically, households with low and middle incomes should benefit,” the coalition decision stated. Eligibility will be limited to households with a taxable annual income of up to €80,000, with an additional €5,000 allowance per child.

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The subsidy for purchasing or leasing an electric or plug-in hybrid car will amount to €3,000, increasing by €500 per child, up to a maximum of €1,000. Households with particularly low incomes can receive an additional €1,000, with the threshold set at a net monthly income of €3,000. Only private individuals are eligible, and the vehicles must not be immediately resold. Funding will come from the Climate and Transformation Fund.

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The coalition aims to finalize the program’s financial details by the end of the year so that it can launch as quickly as possible in 2026, pending EU Commission approval.

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CSU leader Markus Söder emphasized that “local content criteria” will be included, requiring that a certain portion of the vehicle is manufactured in Europe. “It is important that it is not only cars produced in Asia,” he said. “They must also create value and secure jobs here,” adding that the program will also boost the domestic market.

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Germany had previously offered a similar “environmental bonus” for private individuals and companies, introduced in 2016, but it was abruptly ended in 2023 by the previous government following a Constitutional Court ruling that deemed the federal budget unlawful. The cancellation caused a sharp drop in electric car registrations. By early 2025, around 1.6 million fully electric vehicles were on German roads, representing 3.3% of the country’s 49 million cars, alongside 967,000 plug-in hybrids.

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