Germany’s federal cabinet has approved a five-year extension of the motor vehicle tax exemption for battery-electric vehicles (EVs), maintaining a key purchase incentive and supporting the domestic auto industry.
Under current law, newly registered pure EVs would lose their tax exemption beginning in January 2026. The cabinet’s decision now allows tax relief for new registrations and conversions through December 2030, extendable for up to ten years per vehicle, and prolongs that maximum period by an additional five years to the end of 2035. Only EVs purchased and registered by the close of this year will qualify for the full ten-year exemption period.
In parallel, the Finance Ministry highlighted an existing “investment booster” measure that provides corporate buyers of EVs with enhanced depreciation benefits. Companies acquiring an EV costing up to €100,000 can deduct 75 percent of the purchase price from their taxable income in the year of acquisition, accelerating the tax write-off for fleet electrification.
Earlier in October, coalition leaders also agreed to allocate €3 billion from the national Climate and Transformation Fund and the EU’s Social Climate Fund to a support program for low- and middle-income households. Running through 2029, this initiative aims to lower financial barriers to switching from internal combustion vehicles to emissions-free models.
The Federal Finance Ministry estimates that the tax relief for private EV adopters will amount to about €50 million in 2026, rising steadily to approximately €380 million by 2030, as more drivers take advantage of the exemption. Finance Minister Lars Klingbeil commented that the package “helps everyone transitioning to EVs and strengthens the automotive sector.” He added that these incentives are part of a broader strategy to secure jobs, maintain Germany’s leadership in vehicle manufacturing, and foster a competitive, future-oriented industry.
Taken together, these measures are designed to sustain market momentum for electric mobility, encourage early adoption among consumers and businesses, and underpin Germany’s goal of climate-neutral transportation.
Source: Der Spiegel
