GERMANY LAUNCHES HUGE DISCOUNTS TO BOOST ELECTRIC AND HYBRID CAR SALES

The German Government will discount the price of new electric and plug-in hybrid (PHEV) cars to boost sales, it has announced today - and the savings are significantly larger than those Britons are being offered by Labour's Electric Car Grant (ECG).

The new measure is designed to encourage low income households to switch to greener cars to lower the nation's traffic-related emissions. 

The scheme offers a flat-rate subsidy of €3,000 (£2,600) on all electric car purchases, which increases by €1,000 (approx £870) if the vehicle costs under €60,000 (£52,000), and by €2,000 (approx £1,700) if the retail price is less than €45,000 (£39,000).

And there are additional benefits for families too; households with children aged under 18 can receive an extra €500 (approx £430) discount for each of their first two children, increasing the amount by up to €1,000. 

This elevates the total possible grant to €6,000 - or £5,200. It means Labour's maximum £3,750 grant, which is only available to a handful of EVs that meet its stringent 'sustainability' criteria, pales in comparison.

And Germany's efforts to decarbonise its car parc goes even further, issuing discounts for petrol and diesel powered plug-in hybrids, too. 

While the standard-rate subsidy for PHEV models is half that of EVs (€1,500), all additional benefits provided to EV buyers also apply, meaning those with two children purchasing a sub-€45,000 hybrid can save €4,500 (£3,900), which is still greater than the deal provided to UK drivers on fully-electric models.

Chancellor Friederich Merz approved the scheme, which will be given out retroactively.

It is being backed by €3billion of federal funding to be used by 2029 to subsidise the price of around 800,000 EVs, according to environment minister, Carsten Schneider.

The UK's ECG has received almost £2billion of taxpayer funding until 2030, though has come under heavy criticism from industry insiders due to the tough sustainability requirements and its restriction to only EVs priced up to £37,000.

Plug-in hybrid receive no discount. 

To be eligible for the full £3,750 grant available, car makers must prove the emissions produced during the battery's manufacturing sit below an unspecified threshold, as well as well as the vehicle's assembly and carbon intensity of the electric grids in the countries where the car is made.

Models that fail to meet this benchmark only receive a £1,500 discount, while those that do not meet the lowest threshold are blocked from the scheme entirely. 

So far, just a handful of cars meet eligibility criteria for the full £3,750 discount - and every Chinese brand has been omitted from the grant to date. 

Germany's electrified car discounts have been announced days after the European Union confirmed it will relax its 2035 ban on new petrol and diesel cars with the result that the EU is shifting to a 90 per cent emissions reduction target by 2035 - providing flexibility with internal combustion engines.

Applications can be submitted retrospectively for new registrations from 1 January, and the website for applications will go live in May.

The subsidies were originally agreed late last year by Germany's coalition government led by Chancellor Merz, with the funding set aside for 2026 to 2029.

The measures are being introduced to boost EV registrations, with the expectation that the subsidy scheme will hike new EV sales by 17 per cent year-on-year. 

This would lead to nearly one million registrations, according to the German Association of the Automotive Industry (VDA). 

Last year, Germany was the third biggest EV market, leading Europe and only ranking behind China and the US globally. 

EV sales picked up with registrations rising 43 per cent versus 2024 - the year when subsidies came to an abrupt end.

Compared to 2023 though, last year's 545,000 EVs sold were only a four per cent increase.

Germany's EV sales lag well behind earlier government plans to bring the number of EVs on the road to 15 million by 2030. 

Many drivers cannot afford the upfront cost of an new EV and this is not helped by the fact that it is expensive to charge an EV in Germany.

Analysis from the Energy & Climate Intelligence Unit (ECIU) found that German drivers can expect to save about £970 a year, but British EV owners will save more than £1,500 annually.

The subsidy decision follows the watering down of the EU's 2035 petrol and diesel ban after active lobbying by European car makers, especially German auto makers, because the demand for EVs is too low and without a change to the rules manufacturers would be left with 'multi-billion euro' fines.

2026-01-20T10:05:25Z