Germany plans to launch a €3bn ($3.5bn) electric vehicle (EV) subsidy programme that will be open to all manufacturers, including Chinese brands.
Bloomberg reports that this step comes as the German government seeks to stimulate demand following a significant slump in domestic sales.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The incentives are part of a renewed effort to accelerate electric car adoption and support the country’s automotive sector following a slump triggered by the withdrawal of subsidies in late 2023.
While the programme is designed to stimulate the domestic market, it will not impose restrictions based on the origin of vehicles sold.
The move is expected to favour lower-cost Chinese manufacturers such as BYD, which are increasing their footprint across Europe.
Chinese electric vehicles imported into the European Union are already subject to tariffs, but manufacturers have continued to sell profitably due to comparatively low production costs.
At the same time, the EU is weighing whether to replace import tariffs with a minimum price system.
Germany’s approach differs from policies adopted in other European markets, the report read.
In the UK, grants introduced last year effectively exclude electric vehicles produced in China by setting environmental requirements, including limits on carbon emissions from battery production and vehicle assembly.
France’s social leasing scheme applies similar criteria.
The latest German funding round, first outlined in October, is expected to help finance the purchase of around 800,000 vehicles through 2029, according to the environment ministry, cited by Bloomberg.
Individual subsidies will range from €1,500 to €6,000, depending on household income, family size and vehicle category, and are primarily targeted at low- and middle-income buyers.
The programme is set to benefit manufacturers such as Volkswagen and Stellantis as they introduce more affordable electric models, the report said.
Electric vehicle sales in Germany rebounded last year after a downturn in 2024 following the earlier decision to end subsidies, although the country has repeatedly fallen short of official adoption targets.
Prospects have improved as lower-priced models reach dealerships, including Renault’s R5 E-Tech and Volkswagen’s compact ID. Polo model, which is priced at about €25,000.
Alongside the subsidy scheme, German Chancellor Friedrich Merz’s coalition government has extended a tax exemption for electric vehicles until 2035.
