The Social Democratic Party (SPD) within Germany’s governing coalition is pushing for a significant overhaul of electric vehicle (EV) incentives, outlining a plan that prioritizes affordability, social equity and a shift away from traditional combustion engine vehicles. The proposals, detailed in a recently leaked internal document obtained by “Süddeutsche Zeitung”, indicate a move towards a more targeted and potentially contentious approach to Germany’s EV transition.
Central to the SPD’s vision is a new purchase premium of €3,000 slated to launch in 2024 and continue until 2029. Crucially, this subsidy is intended to be matched by both manufacturers and dealerships, effectively doubling the financial benefit to consumers. Expanding beyond new vehicles, the scheme will extend to used EVs aiming to bolster consumer trust in the burgeoning second-hand market. To address concerns around battery longevity, dealers are also proposed to offer complimentary battery health checks for used EVs purchased under the programme.
However, the scheme’s stipulations introduce a degree of exclusivity. Vehicles eligible for the subsidy would be capped at a price point of €45,000 and stipulated to be manufactured within Europe and achieve a defined environmental score. This effectively excludes many models currently offered by premium brands such as BMW and Mercedes-Benz, raising questions about the program’s impact on the wider automotive sector and whether it genuinely supports broader adoption. Furthermore, access to the subsidy will be restricted to individuals with “modest to moderate monthly incomes” marking a deliberate attempt to direct benefits towards lower-income households.
Beyond direct purchase subsidies, the SPD is advocating for a “social leasing” model, particularly aimed at low-income earners. Inspired by the existing “Social and Mobile” program, this initiative would offer low leasing rates with a subsequent purchase option, specifically targeting groups like shift workers and mobile healthcare providers who rely heavily on vehicle access. A pilot program is anticipated to launch in 2027, contingent on securing funding, potentially through EU channels. Specific cost details remain unconfirmed.
Parallel to these consumer-focused incentives, the SPD intends to disincentivize the use of combustion engine vehicles through a significant revision of company car taxation. The current system, where a flat rate is applied, would be augmented by a variable CO2 component, potentially rising to 1.5% of the vehicle’s list price starting in 2026. This move is aimed at making company car ownership of petrol or diesel vehicles less attractive while favorably positioning electric alternatives. The timing aligns with the cabinet’s recent approval of a law postponing the introduction of vehicle taxes on new electric vehicles until 2035 – a five-year extension designed to further stimulate EV uptake.
The proposals highlight the SPD’s commitment to a “socially just” electric vehicle transition but also expose potential fault lines within the coalition regarding the scope and direction of future automotive policy. Critics are already questioning the limitations placed on vehicle eligibility and income thresholds, suggesting the scheme may inadvertently stifle broader market growth while also risking accusations of unfairly targeting specific manufacturers. The practicality and funding of the social leasing program remain key points of uncertainty as the proposals move through the legislative process.