Germany’s federal government has reached an agreement on key points for a new subsidy program for private electric vehicles. The relaunch of the “environmental bonus,” which was suspended at the end of 2023 due to a lack of funds, aims to achieve three goals, according to Environment Minister Carsten Schneider (SPD) on Monday in Berlin: “We want to do something for the environment, for our European automotive industry, and for households that could not previously afford an electric car without support.”
The program provides retroactive subsidies of between 1,500 and 6,000 euros for the purchase or lease of new vehicles, scaled according to drive type, income, and family size. Up to three billion euros will be available until the end of 2028 to support 800,000 cars, Schneider stated: “2026 marks the beginning of the breakthrough for electromobility.”
China Fears Unfounded
Battery-powered cars, plug-in hybrids, and range extenders are eligible for the subsidies. A minimum electric range of 80 kilometers and a CO2 emission limit of no more than 60 grams per kilometer are required. While Schneider initially favored a stricter limit of 50 grams, the current threshold expands eligibility to models like the Opel Grandland and Mercedes A-Class. The application portal is expected to open in May, with the Federal Office for Economic Affairs and Export Control (BAFA) potentially handling the administration again, though this remains under discussion as it falls under the purview of Economics Minister Katharina Reiche (CDU).
Schneider indicated that the decision regarding the administering agency is still pending, stating, “I am in talks with several agencies; implementation costs are also a factor.” A debate centered on whether the subsidies would be limited to EU-produced vehicles or include those from China. Ultimately, there are no such restrictions. For lower-income households, new cars could become more accessible if German manufacturers soon offer models costing around 20,000 euros with the subsidy applied. Schneider expressed that he does not fear competition from China, noting that “eight out of ten electric cars came from EU production” in 2025.
A base subsidy of 3,000 euros for battery-electric vehicles and 1,500 euros for plug-in hybrids and range extenders is available to households with a taxable annual income of up to 80,000 euros, increasing to 90,000 euros for families with two children. Households earning up to 60,000 euros receive an additional 1,000 euros, and those earning up to 45,000 euros receive 2,000 euros. An additional 500 euros is added per child, up to a maximum of 1,000 euros, resulting in a maximum possible subsidy of 6,000 euros. There is no price cap on the vehicles, but a three-year holding period applies.
“The Transition to an Electric Car Must Be Possible for More People”
Environmental organizations have largely criticized the program’s inclusion of plug-in hybrids, with Deutsche Umwelthilfe calling it a “billion-euro gift” to automakers. Transport & Environment criticized the high-income thresholds and the continued support for plug-in hybrids.
The IG Metall union welcomed the higher subsidies for lower and middle-income car buyers, stating, “The transition to an electric car must be possible for more people,” according to chairwoman Christiane Benner. The union also called for a swift review of potentially limiting subsidies to vehicles produced in Europe.
Conversely, the President of the Association of the Automotive Industry (VDIK), Imelda Labbé, expressed satisfaction that the subsidies apply to cars from all countries, arguing that international manufacturers offer a wide range of affordable electric vehicles.
Criticism has also been directed at the program’s exclusion of used electric vehicles. Environment Minister Schneider stated that the used car market is currently too small. However, industry experts note that electric vehicles depreciate rapidly, a factor already incorporated into lease rates, indirectly increasing the cost of leasing or owning an electric car.
Frequently Asked Questions
What types of vehicles are eligible for the subsidy?
Battery-powered cars, plug-in hybrids, and range extenders are eligible, provided they have a minimum electric range of 80 kilometers and CO2 emissions of no more than 60 grams per kilometer.
What is the maximum subsidy amount available?
The maximum subsidy amount is 6,000 euros, available to households with lower incomes and multiple children.
Are there any restrictions on the origin of the vehicles?
No, there are currently no restrictions on the country of origin for vehicles eligible for the subsidy.
As the application portal opens in May, it remains to be seen how effectively this program will stimulate demand for electric vehicles and whether it will achieve its stated goals of environmental protection, industrial support, and affordability. The program’s success may also hinge on the ability of German automakers to offer competitively priced electric models that benefit from the subsidies.
