Overview

• Government officials say the incentive would be retargeted to low- and middle-income buyers and small businesses, with key terms still being negotiated.
• Financing is slated to come from the Climate and Transformation Fund and the EU Social Climate Fund, with several billion euros through 2029 and about €3 billion earmarked for road projects.
• Only battery-electric vehicles under 50 g CO2 per kilometer would qualify, ruling out plug‑in hybrids and range‑extender models.
• Proposals reported by media include up to €4,000 per car, a vehicle price ceiling near €45,000 and a possible income cap around €45,000 gross, with BAFA expected to administer a program that could begin on January 1, 2026.
• The car‑tax exemption for pure EVs has been prolonged to as late as December 31, 2035 for first registrations through 2030, while retroactive application for earlier registrations remains unsettled, and SPD and CDU/CSU differ over caps and company‑car tax changes.