Germany to slash subsidies for electric cars

As more customers start to gravitate towards eco-friendly vehicles, the German Economics Ministry is planning to taper out its financial incentives for electric car owners and end subsidies for hybrid cars entirely.

A man charges an electric car in Berlin.
A man charges an electric car in Berlin. Photo: picture alliance/dpa | Christoph Soeder

After years of doling out cash to car buyers for the purchase of more eco-friendly cars, Germany is planning a major shake-up of its subsidy system in the coming years.

From January 1st, 2023, financial incentives will only be available for vehicles with a “proven positive climate protection effect”, meaning pure electric cars rather than those that combine battery power with a traditional combustion engine.

That means that subsidies for purchasing hybrid plug-in cars will end entirely in December 2022, while subsidies for electric cars will gradually be reduced.

“We want to sharpen the focus in the future promotion of e-cars and focus more on climate protection,” Economics Minister Robert Habeck told Funke Mediengruppe on Wednesday.

“In our opinion, plug-in hybrids are marketable and no longer need public funding.” 

As set out in the coalition pact of the SPD, Greens and FDP parties last November, the government wants to reform the criteria it uses to allocate state aid and funding to electric cars.

READ ALSO: ‘Danke Deutschland!’ Elon Musk hands over first ‘made in Germany’ Teslas

Currently, car owners can receive up to €9,000 when purchasing an eco-friendly vehicle, but this is set to be cut by more than half to €4,000 in 2023 and then again to €3,000 in 2024 and 2025.

With the state funding set to be reduced, it seems many drivers in Germany have taken the opportunity to submit their application for the subsidy in the nick of time.

According to the Federal Office for Economics and Export Control, funding applications for around 625,000 hybrid and electric cars were submitted to the government in 2021 – more than double the figure for 2020.

“The funding is still at a high level and therefore interesting for consumers,” Habeck said.

Electric vehicles also get favourable rates on certain types of vehicle and road tax in Germany.

The Economics Ministry has said it will put together a draft law outlining the plans, which will then be reviewed by the cabinet.

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Should tenants in Germany be shielded from energy price hikes?

Gas prices have more than tripled in the past year, prompting tenants' rights advocates to call for more social support and a cap on energy costs.

Should tenants in Germany be shielded from energy price hikes?

The German’s Tenants’ Association is calling on the government to put together a new energy relief package to help renters deal with spiralling energy costs.

Gas has become an increasing scarce resource in Germany, with the Economics Ministry raising the alert level recently after Russia docked supplies by 60 percent.

The continued supply issues have caused prices to skyrocket. According to the German import prices published on Thursday, natural gas was three times as expensive in May 2022 as it was in May a year ago.

In light of the exploding prices, the German Tenants’ Association is putting the government under pressure to offer greater relief for renters.


Proposals on the table include a moratorium on terminating tenancy agreements and a permanent heating cost subsidy for all low-income households.

The Tenants’ Association has argued that nobody should face eviction for being unable to cope with soaring bills and is urging the government to adjust housing benefits in line with the higher prices. 

Gas price cap

Renters’ advocates have also joined a chorus of people advocating for a cap on consumer gas prices to prevent costs from rising indefinitely.

Recently, Frank Bsirske, a member of the parliamentary Green Party and former head of the trade union Verdi, spoke out in favour of capping prices. Bavaria’s economics minister and Lower Saxony’s energy minister have also advocated for a gas price cap in the past. 

According to the tenants’ association, the vast majority of tenants use gas for heating and are directly affected by recent price increases.

At the G7 summit in Bavaria this week, leaders of the developed nations discussed plans for a coordinated cut in oil prices to prevent Russia from reaping the rewards of the energy crisis. 

In an initiative spearheaded by the US, the group of rich nations agreed to task ministers will developing a proposal that would see consumer countries refusing to pay more than a set price for oil imports from Russia.

READ ALSO: Germany and G7 to ‘develop a price cap’ on Russian oil

A gas price cap would likely be carried out on a more national level, with the government regulating how much of their costs energy companies can pass onto consumers. 

Strict contract laws preventing sudden price hikes mean that tenants in Germany are unlikely to feel the full force of the rising gas prices this year

However, the Tenant’s Association pointed out that, if there is a significant reduction in gas imports, the Federal Network Agency could activate an emergency clause known as the price adjustment clause.

This would allow gas suppliers to pass on higher prices to their customers at short notice. 

The Tenants’ Association has warned that the consequences of an immediate market price adjustment, if it happens, should be legally regulated and socially cushioned.

In the case of the price adjustment clause being activated, the government would have to regulate the costs that companies were allowed to pass onto consumers to prevent social upheaval.