German coalition agrees on EUR3B EV incentives through 2029

German coalition agrees on EUR3B EV incentives through 2029

In a significant move to bolster the electric vehicle (EV) market, the German coalition has agreed on a €3 billion package of incentives to promote EV adoption. The incentives, set to run until 2029, aim to accelerate the transition to electric mobility and support the automotive industry.

The new package includes an extension of the vehicle tax exemption for electric cars until the end of 2035. This exemption was initially set to expire at the end of 2026, but the coalition has agreed to extend it by an additional five years. The extension is expected to reduce tax revenue by €45 million in 2026, with subsequent years seeing higher shortfalls, reaching €370 million by 2030 .

The coalition has also agreed to increase the gross price limit for tax incentives for electric vehicles to €100,000 and to create a special depreciation allowance for electric vehicles. These measures are part of a broader "investment booster" package designed to strengthen the automotive industry and support the shift towards e-mobility.

The extension of the vehicle tax exemption is seen as a crucial step in encouraging more people to purchase electric cars. The automotive industry, which has been struggling with a sales slump and competition from China, is expected to benefit significantly from these incentives. The coalition has also agreed to discuss a social leasing program at an upcoming meeting, which aims to make EVs more accessible to lower and middle-income households .

The €3 billion package is part of a broader effort by the German government to promote electric cars and reduce carbon emissions. The extension of the vehicle tax exemption is expected to help Germany meet its climate goals and position itself as a leader in the global EV market.