Electric vehicle subsidies: what’s changing in 2023?

E-Förderung: Was ändert sich 2023?

A lot is happening in the area of electric mobility. In Germany, for example, the number of electric vehicles on the road is expected to exceed two million in 2023: For the Federal Government there, this is the right time to realign its subsidy programmes for electric vehicles. As established in the coalition agreement, from the start of the new year, funding will focus solely on vehicles that have a proven positive effect in terms of climate protection. Plug-in hybrids are expected to be completely removed from the subsidy list, while battery vehicles are to receive a lower share from the state.

Here’s what subsidies will look like in Germany

All-electric vehicles (and fuel-cell vehicles) up to a net list price (excluding special equipment) of €40,000 will receive €4,500 from public funds. Until this change takes effect, the government share of the environmental and innovation bonus will remain at €6,000. For vehicles priced between €40,000 and a maximum of €65,000, the state will subsidise new electric vehicle purchases from the beginning of next year to the tune of €3,000 (down from €5,000 currently).

Important: electric vehicles priced over €65,000 and plug-in hybrids will no longer be subsidised. In addition, only private individuals are able to benefit from the scheme after 1 September 2023 – company cars and other vehicles used for commercial purposes will no longer be eligible. Further changes are planned for 1 January 2024, when the assessment limit for electric vehicles will be set at a maximum net list price of €45,000 for the government share – with a subsidy of €3,000.

Also important to know
The application date remains relevant for the government share of the subsidy, which in turn requires registration of the vehicle and confirmation of the granting of the manufacturer’s share. The manufacturer’s share will in future be 50% of the total government subsidy and will be added when determining the total subsidy. The Federal Ministry for Economic Affairs and Climate Action (BMVK) is currently engaged in discussions with manufacturers on this issue. Motor vehicle and company car tax benefits will remain in place.

Gradual move away from subsidies

Germany’s curbing of its subsidy spending is indicative of a pan-European development. In 2020, the European Automobile Manufacturers Association (ACEA) identified 20 national purchase subsidy programmes still in place in the EU, and the number continues to fall. Budget cuts or the achievement of specified market targets are often cited as reasons for restricting or terminating incentives.

In France, for example, the subsidy is set to reduce from €6,000 to €5,000, and plug-in hybrids will no longer qualify. In the Netherlands, the subsidy will gradually decrease until 2025. However, demand here regularly exceeds the annual budget so much that the bonuses are only available for a few months. Italy and Spain, on the other hand, are retaining the existing BEV and PHEV subsidies – and are offering additional scrappage bonuses. The biggest cuts in financial support will be seen in the UK and Sweden. From 2023, fully and partly electric-powered vehicles will no longer receive any bonus at all (in Sweden this has been the case since last November).

The situation is slightly different in Norway, which has so far completely exempted new electric vehicle purchases from VAT. This is now changing, but only above a certain net purchase price: in the new year, vehicles that cost kr500,000 or more – approximately €50,000 – will be subject to at VAT rate of 25% levied on the full price of the vehicle.

Germany also offers tax relief, but for the private use of an electric company car. Here, electric vehicles that are registered for the first time by 31 December 2025 at the latest are exempt from motor vehicle tax until 31 December 2030. Electric vehicles and plug-in hybrids used as company cars are also favoured through special provisions for non-cash benefits.

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A legal entitlement does not exist. The statements contained in this document are intended for information purposes only and do not purport to be complete. All information is subject to change or correction. Further information is available from your Volkswagen Partner or at www.bafa.de