Subsidies in Germany: how do they work?

Published by on 03.25.2021 - 3 min

Germany introduced its National Electromobility Development Plan in 2016. In order to get more electric vehicles on the roads, the federal government has worked with the country’s states to offer several types of financial assistance. These incentive programs apply to both charging installations and electric vehicles themselves. Let’s take a closer look.

Why encourage consumers to buy electric cars?

In 2014, the European Union voted in favor of a drastic reduction in carbon emissions from vehicles. Automobile manufacturers, for example, had to lower the average emissions level of all new vehicles they produced. The goal was set at 95 g/km. In the years to come, this limit should be lowered even more in accordance with EU regulations.

The automobile industry is committed to respecting these limits by offering cars that consume much less fossil fuel and emit less carbon dioxide. One specific type of vehicle meets all the criteria: vehicles with an electric motor that is powered by a regular or hydrogen battery, which produce zero emissions*. They also benefit from special attention from automobile manufacturers such as Groupe Renault when it comes to using recycled materials in production and ensuring the recycling of their components at their end of life.

Faced with the staggering number of vehicles currently on the roads, competition from the secondhand market, and the cost of infrastructures and electric vehicles, promoting this type of mobility is a strategic choice to encourage the transition from combustion-powered engines to electric mobility. Four years ago, Germany’s federal government introduced three major programs: incentives for the purchase of electric vehicles, the development of charging stations, and the purchase of electric and rechargeable hybrid vehicles for public services.

Which models qualify for subsidies when purchasing electric vehicles?

In Germany, all programs designed to support electromobility are based on the same principle: cars must emit less than 50 g of CO2 per kilometer in order to qualify for any subsidies. This of course includes 100% electric vehicles, whether they use regular or hydrogen batteries, which produce zero emissions*, but also rechargeable hybrids.

Germany’s multiple ongoing electromobility programs

Subsidies for purchasing electric vehicles – new in 2020

The financial assistance programs offered by Germany’s federal government, in partnership with manufacturers, were revised in 2020. The plan to relaunch the automobile industry, part of a larger national economic recovery plan, includes a series of extensions for bonuses. These extensions join the existing incentive programs for the purchase of rechargeable hybrid and 100% electric vehicles.

All- electric vehicles therefore qualify for both government subsidies (66% of the value) and a bonus from the manufacturer (at least 33% of the total amount.) Learn more about the specific requirements on the electromobility portal of the BAFA (Bundesamt für Wirtschaft und Ausfuhrkontrolle, the Federal Office for Economic Affairs and Export Control).

Currently, and until at least December 31st, 2021, since federal aid was doubled, consumers purchasing 100% electric vehicles qualify for 9000 euros of subsidies if the catalog price is less than 40,000 euros, and 7500 euros of subsidies if the catalog price is between 40,000 and 65,000 euros. For rechargeable hybrid cars, the subsidy is equal to 6750 euros for vehicles costing less than 40,000 euros, and 5625 euros for vehicles costing between 40,000 and 60,000 euros. Long-term leases of these types of vehicles also qualify for bonuses that are proportional to the chosen type of financing. 

Purchases of secondhand electric and rechargeable hybrid vehicles qualify for a governmental subsidy as long as they were registered after May 18th, 2016, and have less than 15,000 kilometers on them. It is equal to 5000 euros for 100% electric cars, and 3750 euros for rechargeable hybrids.

Tax exemptions and bonuses for the installation of a wallbox: other types of subsidies available for electric cars

Another incentive to encourage consumers to buy electric vehicles is through tax cuts. The ten-year tax exemption on battery-powered cars has been extended until 2030. Owners of electric vehicles (excluding utility vehicles) are exempt from the annual road tax (Kfz-Steuer) imposed on other categories of vehicles. 

In addition to this, a new program offering financial assistance for the installation of home charging stations, or wallboxes, was introduced in November 2020. The federal government allocates a subsidy of 900 euros to all electric vehicle owners who install a station of this type at home, as long as the electricity used is 100% from renewable energy sources (wind or solar power, for example,) its charging capacity is above 11 kW, and it can be controlled remotely. 

Renault Captur E-TECH Hybrid plug-in

Requesting financial assistance from the BAFA: how does it work?

Consumers who want to take advantage of this financial assistance when purchasing an electric vehicle must apply through the BAFA. This public service department charged with overseeing environmental aid, in particular for building insulation, has recently improved its registration process. Now, all you need is your vehicle identification number: the KBA (Kraftfahrt-Bundesamt, the federal automobile agency charged with processing vehicle registrations) has cross-referenced their files with the BAFA in order to speed up the process.

After researching the qualifying models and buying their electric or rechargeable hybrid car, owners can submit their application online. They will quickly be notified of a response and awarded the bonus. The procedure is similar for the installation of a wallbox. All candidates need to do is submit a proof of residence. 

Subsidies in neighboring countries

Germany is not the only country encouraging its drivers to become part of the energy transition. In Austria, electric mobility is subsidized by government aid, whether it be for the purchase of vehicles or the installation of charging stations. Cars powered by regular and hydrogen batteries also qualify for these measures. For more details, check out the website of the Federal Environmental Ministry.

In German-speaking Switzerland, several cantons (Bern, Basel-Landschaft, Basel-City, Nidwald, Obwald, Zurich, etc.) offer individuals tax cuts for their electric vehicles. Bonuses are also available for vehicles purchased in Basel-City, Bern, or the canton of Thurgau. The specific financial incentives available depend on the local legislation. Find more details on the websites of the different cantons of the Confederation.

Renault models that qualify for the incentive programs

All the vehicles from Renault’s 100% electric line qualify for financial aid from the government (and the manufacturer.) The Renault ZOE therefore qualifies, as do the New Twingo Electric and the Kangoo Z.E. and Master Z.E utility vehicles. As the bonus also applies to 100% electric vehicles powered by hydrogen, Renault’s utility vehicles from this line also qualify.

As for Renault’s rechargeable hybrid vehicles, several models available for purchase meet the emissions criteria (less than 50 g of CO2 per kilometer): the Captur E-Tech Plug-in and the Mégane E-Tech Plug-in, both of which are eligible for incentive bonuses!


*Neither atmospheric emissions of CO2 nor pollutants while driving (excluding wear parts).