New electric car subsidy: Who receives it and how high the premium is

With the new electric car subsidy, the German government is retroactively promoting the purchase and leasing of environmentally friendly new cars with a grant of at least €1.500 and up to €6.000, effective January 1, 2026. The automotive industry sees this as providing "important impetus".

The new electric car subsidy program is here: It supports the purchase and leasing of new vehicles. The basic subsidy for purely electric cars is €3.000, and for plug-in hybrids, it's €1.500. Depending on income and number of children, there is a higher subsidy. The program aims to support families who might otherwise not be able to afford an environmentally friendly new car. It is also intended to support the German automotive industry. The subsidy program was introduced in Federal Environment Ministry

Federal Environment Minister Carsten Schneider The details have now been presented. "This program is a boost for the environment and climate, a boost for our automotive industry, which offers powerful electric cars, and it's an outstretched hand for households that want to switch to electromobility," said the minister. Three billion euros are available, which are intended for approximately... 800.000 vehicles in three to four years rich.

"By 2025, almost one in five new cars would be an electric car, which is 45 percent more than the previous year," said Schneider. Many affordable cars, especially from German manufacturers, are currently entering the market. Things are starting to move, the minister added. "We want to support this." 

The German government has already introduced strong incentives for electric company cars (company car taxation and accelerated depreciation). Furthermore, the vehicle tax exemption for electric cars has been extended.

Funding applications can probably be submitted from May onwards (retroactively).

What was still missing was targeted support for private individuals. The subsidy applies to the purchase and leasing of passenger cars. Class M1 and that retroactively to January 1, 2026 (date of new registration).

For the application process, a further step is required. Portal created expected in May 2026 The process is starting. However, applications can be submitted up to one year after approval. The procedure is intended to be as unbureaucratic as possible. Details will be clarified in a guideline by the end of February.

What is promoted?

All passenger cars first registered in Germany are eligible for funding.

✔️ purely battery-electric drive,

✔️ with plug-in hybrid drive (requirements: CO₂ emissions should not exceed 60 g CO₂/km or the electric range should be at least 80 kilometers) 

✔️ battery-electric drive with range extender (prerequisites as such).

The subsidy is granted regardless of the list price.

Used cars are not eligible for subsidies. 

Who can receive the funding?

The income limit is maximum €80.000 taxable annual household incomeThe income limit is increased by €5.000 per child for up to two children (under 18 years of age).

So, for families with one child, it is... EUR 85.0000 and in the case of two or more children maximum €90.000 taxable annual household income.

How did the limit of 80.000 euros come about?

Photo: © Federal Ministry for the Environment

According to the Federal Ministry for the Environment, the established income limit of €80.000 per household corresponds to the average household income of new car buyers. This is based, among other things, on data from the "Mobility in Germany" survey: This means that around half of all households that privately purchase a new car can benefit from the subsidy.

The income limit is intended to ensure that windfall gains are avoided and that the funding reaches those who really need the support.

What about pensioners?

Pensioners who are not required to file a tax return and for whom no tax return exists for previous years can submit one retroactively. They can provide a pension statement and a self-declaration of any additional income.

The details are yet to be released.

How big is the promotion?

The basic funding amounts to 3.000 euros for purely battery-electric vehicles and

1.500 euros for plug-in hybrids and electric cars with range extenders.

Families receive An additional 500 euros per child, maximum 1.000 euros (so two children are taken into account)

For households with a taxable income of less than €60.000 per year, there is an additional €1.000. For households with a taxable income of less than €45.000, there is an additional €1.000. "The socially tiered system was particularly important to me," said Schneider. 

The German Association of Motor Trades and Repairs (ZDK) also welcomes the socially tiered approach. "Providing more targeted support to lower-income households and families is the right approach," said Thomas Peckruhn. "Given the shrinking price gap between combustion engine and electric vehicles, as well as the wider range of electric models in the affordable small and compact car segment, this funding package should contribute to a noticeable increase in demand for electric cars this year."

➡️Those with a household income of less than 45.000 euros and two children can receive a 6.000 euro bonus for a new electric car.

Is there a minimum holding period?

Yes, the subsidy is tied to a minimum holding period for both purchases and leases. It amounts to... 36 months from the date of first registration"The funding is specifically aimed at private individuals who actually want to use a vehicle in everyday life," according to the Federal Ministry for the Environment.

When will the application for funding be submitted?

The application can be submitted in a single-stage process after the vehicle has been registered. The application must be submitted no later than one year after registration in the applicant's name. This requires...

✔️ A copy of the purchase or lease agreement

✔️ The vehicle registration certificate, as proof of the vehicle's initial registration to the applicant in Germany

✔️ The two most recent tax assessments, no more than three years old

ZDK and ZVK have different assessments of the premium.

The Central Association of the Automotive Industry (ZDK) welcomes the new bonus. "The funding levels proposed by the Federal Ministry for the Environment are, in our view, sensible and provide the right incentives. This sends a clear and comprehensible signal that makes it easier for many customers to get started with e-mobility," explains ZDK President Thomas Peckruhn.

Crucial now is swift and unbureaucratic implementation so that car dealerships and customers can quickly benefit from the new funding. The ZDK represents the interests of car dealerships, automotive repair shops, suppliers, and businesses in the automotive trade and industry.

The assessment is completely different by Federal Guild Master of the Automotive Trade, Detlef Peter Grün. The President of the BIV ZVK He says: "Simply switching between different approaches is not proof of sustainable policy. Not subsidies, but a functioning infrastructure and affordable charging will ensure that more electric cars end up on the road in the long term." He believes there is still "considerable need for action" on both issues. 

Source: Federal Ministry for the Environment; ZDK; ZVK; DHB

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