Germany has rolled out a 3 billion electric-vehicle subsidy program that will be open to all manufacturers, including Chinese brands, as Berlin attempts to restart EV demand after sales weakened when incentives were scrapped in late 2023. The scheme, unveiled on Monday, removes any origin-based restrictions despite existing EU tariffs on Chinese-made electric cars, with Environment Minister Carsten Schneider saying there is no evidence of a major influx of Chinese vehicles and that Germany should compete openly. That approach could be supportive for lower-cost manufacturers such as BYD (BYDDF), which have continued to sell profitably in Europe due to lower production costs, even as Brussels considers replacing tariffs with a minimum price system.
The decision puts Germany at odds with other major European markets. The UK and France have introduced EV incentive programs that effectively exclude Chinese-made vehicles by imposing environmental and supply-chain requirements, while Germany’s plan remains broadly inclusive. First outlined in October, the program is expected to support around 800,000 vehicle purchases through 2029, according to the environment ministry, with subsidies ranging from 1,500 to 6,000 depending on household income, family size, and vehicle type. The funding is aimed primarily at low- to middle-income buyers and is designed to coincide with the arrival of more affordable electric models.
From an investment perspective, the measures could support European automakers expanding lower-priced EV offerings, including Volkswagen and Stellantis, while also intensifying price competition as Chinese brands gain traction. EV sales in Germany have been volatile, recovering last year after a slump in 2024 following the removal of earlier subsidies, and the country has repeatedly missed official adoption targets. Prospects may be improving as cheaper models reach showrooms, including Renault’s R5 E-Tech and Volkswagen’s compact ID. Polo priced around 25,000, alongside a broader policy backdrop that includes an extension of EV tax exemptions through 2035, a move the finance ministry estimates will cost about 600 million in lost revenue through 2029.