Germany

• Germany is officially reviving its EV subsidy program this month.
• Under the new rules, both extended-range EVs and Chinese-built electrified cars will be eligible for the incentive.
• The country expects more than 800,000 vehicles to benefit from the program.

While the U.S. has done away with consumer-facing EV subsidies, the rest of the world seems to be digging in deeper. The latest change comes from Germany, which launched a new incentive program that extends past just traditional EVs and plug-in hybrids to extended range EVs (EREVs) and even Chinese-built vehicles.

Berlin’s newly announced program, reported on by various outlets, grants buyers of new electrified vehicles between $1,700 and $7,000. This figure depends on several factors, including the powertrain of the vehicle and income level of the buyer, but is meant to help revive stagnant sales one of Germany’s key industries.

For the first time EREVs—vehicles where batteries power the wheels and are recharged by a small combustion engine—will explicitly be eligible under the new program. So are plug-in hybrids that meet certain thresholds (like an all-electric range of at least 50 miles and complementary emission restrictions). And perhaps most controversially, there are no rules excluding Chinese-built vehicles from subsidies.

Both purchases and leases are eligible for the subsidies, as long as the owners keep the vehicles for 36 months. Base subsidies for EVs start at $3,500 while PHEVs and EREVs begin at a lesser $1,700. 

Germany prematurely ended subsidies for EVs in 2023, causing a dip in electric car sales there. The German government hopes that this new program will reignite interest in EVs as well as make EVs more affordable segment-wide—especially cars like the VW I.D. Polo that is promised to start at under $30,000 before subsidies.

This is massive news for Chinese brands like BYD and Xiaomi that are looking to expand in markets like Europe and is the second major victory this month for the country following Canada’s announcement of tariff cuts for made-in-China EVs.

Germany seems to be brushing off the notion that Chinese brands will outsell its domestically-built cars.

“I am convinced of the quality of European and German brands,” said German Environment Minister Carsten Schneider at a Monday press conference, per Bloomberg. “I cannot see any evidence of this postulated major influx of Chinese car manufacturers in Germany, either in the figures or on the roads—and that is why we are facing up to the competition and not imposing any restrictions.”

Officially, Germany has set aside about $3.5 billion in incentives for the program. This is expected to cover about 800,000 vehicles (including retroactive applicants who purchased after January 1st of this year) and will last until 2029.

The message that the country is sending is clear. EV sales won’t be revived by ideology or protectionism. Consumers have made it clear that they want more choice and affordability, and these new subsidies may do just that.