Key facts
- The program was designed to run until 2029 but could be exhausted by the end of 2027 at the current spending rate.
- Government estimates say the funding covers around 800,000 vehicles, with grants of up to €6,000 per vehicle.
- The 2027 federal budget originally earmarked €803 million for the scheme; the government now expects to pay out €1.7 billion.
- The budget document says the allocation is being adjusted without changing the overall size of the program.
- Subsidies are not reserved at order; they are granted only once the vehicle is registered for the first time.
- EY automotive expert Constantin Gall told AFP the market is booming primarily because of the subsidy.
Germany's electric vehicle subsidy scheme is spending its €2.7 billion budget far faster than the government anticipated, according to a document prepared for final negotiations on the country's 2027 federal budget and seen by WELT, a sister publication of POLITICO in the Axel Springer Group. The program was supposed to last until 2029, but at the current rate of spending the entire budget could be gone by the end of 2027.
The document states that the scheme is developing far more dynamically than anticipated when it was designed and its funding requirements were originally calculated. The budget allocation is being adjusted, but without changing the overall size of the program, according to the document.
Government estimates say the funding is enough to subsidize around 800,000 vehicles, with buyers able to receive grants of up to €6,000 per vehicle. In early October, BAFA, the export control agency that administers the scheme, said it had already approved 100,000 applications and paid out more than €430 million. If applications continue at the same pace, spending could reach €1 billion in 2026.
The federal budget originally earmarked just €803 million for the scheme in 2027, but the government now expects to pay out €1.7 billion, draining the fund. So far, the government has given no indication of whether it intends to put more cash into the program.
Environment Minister Carsten Schneider said in October that demand had exceeded all expectations, and sought to reassure prospective buyers that there is enough money to continue funding through 2027. "Anyone who decides to buy a battery-electric vehicle now and meets the eligibility criteria need not worry about next year either," he told Der Spiegel.
The application process carries risk for buyers facing long delivery times: subsidies are not reserved when a customer places an order at a dealership, but are granted only once the vehicle has been registered for the first time. More than 94,000 new EVs were registered in October for a record market share of 37%, according to the Federal Motor Transport Authority. Constantin Gall, an automotive expert at the EY consultancy, told AFP that the market is booming primarily because of the subsidy, and said he expects registrations to fall sharply when the money runs out, as they did in 2024 after the subsidy was discontinued in December 2023.