The German government has reached a deal with carmakers to jointly spend EUR1.2bn (US$1.4bn) on incentives to boost electric car sales.
Buyers will be able to receive up to EUR4,000 ($4,600) in rebates to help offset the higher price of an electric vehicle. Purchasers of plug-in hybrid cars will get up to EUR3,000 ($3,400) off the price with the industry contributing 50% of the cost.
Finance minister Wolfgang Schaeuble said: "The goal is to move forward as quickly as possible on electric vehicles. With this, we are giving an impetus."
The incentives could start as early as next month.
Chancellor Angela Merkel hinted in February that she was ready to back subsidies to reach her goal of 1m electric cars on German roads by 2020. The new announcement follows weeks of negotiations with carmakers who originally offered to pay 25% of the total.
Schaeuble said EUR300m ($3.4m) would be used on expanding the charging infrastructure between 2017 and 2020, adding the government was considering additional steps such as tax incentives to make EVs even more attractive.
Just over 30,000 electric vehicles have been sold in Germany where the overall vehicle market exceeds 3m cars annually.