Germany launches new EV subsidy for low-income households, but includes hybrids

The German government has started a new subsidy programme to support lower income households in buying or leasing electric cars. But environmentalists said the program will have limited climate benefits because it includes many plug-in hybrids.

Households with a taxable income below 80,000 euros can benefit from the new programme, with additional allowances for households with children. Low-income families with several children can receive up to 6,000 euros when they buy a fully battery-electric car.

The country’s coalition government of chancellor Friedrich Merz’s conservative CDU/CSU alliance and the Social Democrats (SPD) had earlier agreed to spend three billion euros on supporting electric mobility adoption among low- and middle-income groups.

SPD environment minister Carsten Schneider said he expected that around 800,000 car purchases would benefit from the scheme over a period of three to four years.

Following the abrupt end of an earlier purchasing subsidy in late 2023, sales of electric cars initially collapsed, but have since recovered. Following the 2024 dip, registrations of fully electric cars rose by more than 40 percent in the past year.

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But sales lag well behind earlier government plans to bring the number of EVs on the road to 15 million by 2030. The number of fully electric cars has just crossed 2 million.

The high average price of new electric vehicles remains a major obstacle to their mass adoption because it often limits purchases to drivers with higher incomes.

NGO Transport & Environment said the new programme “doesn’t fit the population or the climate”. It criticised that income thresholds were much too high and that the programme didn’t include used cars, given that few low-income households ever buy new models.

The NGO added that it didn’t make sense to promote plug-in hybrids because they emit almost as much CO2 as conventional cars in real-world operation. Greenpeace also said that “promoting bulky SUVs and climate-damaging plug-in hybrids is misguided, both socially and in terms of climate policy.”

Environment minister Schneider said during a press conference that support for plug-in hybrids “would not have been the first priority” for his ministry, but was a compromise with a view to saving jobs in the car industry.

Clean Energy Wire. Reproduced with permission.