Federal government approves new subsidies for electric cars

The German government has approved two new subsidies for electric cars in order to revive the stagnating market. Although private buyers will continue to receive no state support, commercial users will benefit from the new fiscal incentives. What is behind these measures and how could they affect the market?

The most important facts in brief:

• The new subsidy applies retroactively from July 1 and will initially run until the end of 2028.
• Companies can benefit from a special depreciation allowance for newly registered battery electric vehicles.
• The upper purchase price limit for the 0.25 percent company car tax has been raised to 95,000 euros.
• Electric cars will continue to be exempt from vehicle tax until the end of 2030.

Review of the environmental bonus and the current situation

After the end of the state purchase subsidy through the environmental bonus, new registrations of electric cars pl ummeted and then stagnated. This development is at odds with the climate targets of the government and the EU, which aim to reduce CO₂ emissions in the transport sector. The German government has now decided on new subsidies to help get more battery electric vehicles back on the road and thus support the climate targets.

Special depreciation for electric cars from companies

One of the new measures is the introduction of a special depreciation allowance for newly registered battery electric and comparable zero-emission vehicles. This regulation applies retroactively from July 1, 2024 and runs until the end of 2028, allowing companies to write off part of the acquisition costs more quickly for tax purposes, which makes investing in electric vehicles more attractive. This measure is part of the 2025 federal budget and was negotiated over a period of months by the governing coalition under Economics Minister Robert Habeck, Federal Chancellor Olaf Scholz and Finance Minister Christian Lindner.

Increase in the upper purchase price limit for company cars

Another change concerns the so-called 0.25 percent rule for company car taxation of e-vehicles. The upper limit for the gross list price has been raised again, this time to 95,000 euros. This measure is intended to make more expensive electric vehicles more attractive as company cars and thus encourage more companies to invest in switching to more environmentally friendly vehicles.

Tax exemption for electric cars

In addition to the new support measures, some tax concessions remain in place. For example, newly registered electric cars will continue to be exempt from vehicle tax until the end of 2030. This regulation is intended to help reduce the running costs of electric vehicles and thus make the total cost of ownership more attractive compared to combustion vehicles.

Conclusion

With the new subsidy measures, the German government aims to increase the attractiveness of electric cars for commercial users and thus stimulate the stagnating market. The special depreciation allowance and the increased purchase price cap for company cars could help to put more electric vehicles on the road.

However, it remains to be seen whether these measures will be sufficient to achieve the desired effects. The decisive factor will be how quickly and effectively these incentives are accepted by companies. It remains to be hoped that private buyers will also be able to benefit from state subsidies for electric mobility again at some point.