The German government has announced a new electric vehicle incentive program that will provide subsidies of up to €6,000 for battery-electric vehicles and up to €4,500 for plug-in hybrids starting in 2026. The program, financed through €3 billion from the Climate and Transformation Fund, marks a significant shift in Germany’s approach to promoting electromobility.
Income-Based Subsidy Structure
Unlike previous programs, the 2026 subsidy features a social tier system based on household income. The maximum subsidy is reserved for families with lower incomes and children. For a battery-electric vehicle, households with taxable annual income up to €45,000 and two or more children under 18 can receive the full €6,000. The base subsidy starts at €3,000 for BEVs and €1,500 for PHEVs, with additional amounts based on income brackets and number of children.
The program caps eligibility at €80,000 in taxable household income, though this limit increases by €5,000 per child (up to two children), potentially reaching €90,000 for families with two or more children. This income threshold represents the median income of new car buyers in Germany, meaning approximately half of all private new car purchasers could qualify.
No Price Cap on Vehicles
A notable change from previous subsidy programs is the absence of a maximum purchase price limit. This means even high-end BMW models like the i7 M70 xDrive (starting at €182,400) or the iX M70 could theoretically qualify for the subsidy, provided the buyer meets the income requirements. This approach has drawn some criticism, as it allows very expensive and powerful vehicles to receive taxpayer-funded incentives.
Plug-in Hybrid Requirements
For plug-in hybrids to qualify, they must meet specific environmental criteria through June 30, 2027: either CO₂ emissions not exceeding 60 g/km (type approval value) or a minimum electric range of at least 80 kilometers. This would include models like the BMW X5 xDrive50e, 530e, or the upcoming plug-in hybrid variants in BMW’s lineup that meet these thresholds.
Starting July 1, 2027, the government plans to reassess PHEV eligibility based on real-world CO₂ emissions rather than type approval values, encouraging more extensive use of electric mode in daily driving.
Application Process and Timeline
Vehicles must be newly registered after January 1, 2026, to qualify. While applications won’t be available until approximately May 2026, the subsidy can be applied for retroactively up to one year after the vehicle’s registration date. This single-step application process—requiring only post-registration paperwork—represents a significant simplification compared to previous two-stage programs.
Required documentation includes copies of the purchase or lease contract, vehicle registration certificate, and the two most recent tax returns (no more than three years old). The government recommends using the online ID function of German personal identification cards for faster processing.
Lease Customers Included
Both purchasers and lessees can benefit from the program, with identical subsidy amounts and requirements. The lease customer must be the registered owner of the vehicle, and a 36-month minimum holding period applies from the date of first registration. This requirement aims to prevent immediate resale of subsidized vehicles for profit.
Program Scope and Duration
The €3 billion budget is expected to support approximately 800,000 vehicles through 2029, depending on the mix of BEVs versus PHEVs claimed. As of today, roughly 80 percent of newly registered electric vehicles in Germany are produced in Europe, though the government is considering EU preference rules that could be integrated into the program at a later date.
For BMW customers considering electric models, this represents a significant opportunity to reduce the purchase or lease cost of vehicles ranging from the affordable iX1 to the flagship i7, provided income eligibility requirements are met.
[Source: BimmerToday]
