The incident happened last October at a neo-Nazi event in Riegel am Rande in the southern German state of Baden-Württemberg.
The 29-year-old accused was sitting in his car in a car park when he was approached by a group of left-wing extremists, who had their faces covered. The neo-Nazi reacted by starting the ignition and driving into them at speed, hitting a 22-year-old.
The young man suffered a severe head injury and haemorrhaging, and continues to suffer from a speech impediment and motor dysfunctions.
But a Freiburg court acquitted the neo-Nazi of all charges, the Süddeutsche Zeitung reported on Friday. The judge ruled that he had acted in self-defence while trying to escape, and that the prosecution had failed to prove that he was deliberately trying to harm anyone.
"Justice is not biased," the judge said in her closing statements, adding that the trial had not been about political views, but whether a crime had been committed. She argued that the principle of "innocent until proven guilty" also applied to neo-Nazis.
The state is now obliged to pay damages to the neo-Nazi for taking away his driving license following the incident.
A court press statement said that the left-wing activists could easily have got out of the car's way, and that although the accused could have taken another route to avoid a collision, the judge could not rule out that he had panicked and not noticed this alternative.
The court also disregarded the prosecution's evidence that the accused had posted a message on Facebook shortly before the incident, saying that he would love to be in a situation where he could "get" a leftist.