Huge plug-in hybrid car grant launched in Germany

Germany has launched a new incentive for buyers of plug-in hybrid models, slashing prices by the equivalent of up to £4,000.

The announcement comes as part of a new electric car subsidy programme by the German Federal Government designed to get households with lower incomes into low and zero-emission vehicles. Electric cars benefit from a flat €3,000 discount, which increases by €1,000 if the vehicle costs under €60,000, and by €2,000 if it’s under €45,000. Furthermore, German households with children aged under 18 can receive an extra €500 discount for each of their first two children making an extra saving of €1,000. That puts the total possible grant at €6,000 or £5,200.

Yet unlike the UK’s Electric Car Grant (ECG) which, as its name suggests, is only applicable to fully-electric models, Germany’s scheme even offers discounts for petrol and diesel powered plug-in hybrids. The basic subsidy for PHEV models is half that of EVs (€1,500), however, all of the aforementioned additional benefits still apply, meaning those with two children deciding to purchase a plug-in hybrid model costing under €45,000 could receive a chunky €4,500 (£3,900) subsidy – effectively a 10 per cent discount.

Of course, like the ECG, which is offered in two tiers – Band 1 (£3,750 discount for the most sustainably-produced EVs) and Band 2 (£1,500 discount) – the German grant comes with several stipulations. Total post-tax household earnings must be below €80,000 to qualify, while a maximum holding period of 36 months means buyers will need to keep the vehicle for three years if they wish to keep the bonus and not have to pay it back.

Not all plug-in hybrid and range extender cars will be eligible for the grant, either; vehicles must emit a maximum of 60 grams of CO2 per kilometer or provide a minimum of 80km of pure-electric driving range.

The whole grant is set to cost the nation almost €3 billion (£2.6bn) and aims to introduce 800,000 new electrified vehicles to German streets. This makes Germany’s EV incentive scheme much more ambitious on paper than the UK alternative which is set to cost the British taxpayer £650 million and has recently been extended all the way until 2030.

Moreover, Germany’s new EV subsidy scheme has been announced alongside an extension of road tax exemption for electric cars; all other vehicles must pay an annual fee based on engine displacement and CO2 emissions. Simultaneously, however, on the other side of Europe, UK Chancellor Rachel Reeves recently announced that electric cars will be subject to an additional pay-per-mile tax from April 2028.

It’s perhaps no surprise that Germany has chosen to include plug-in hybrid vehicles within its electric car scheme given the new legislatory changes by the EU which mean the sale of new petrol, diesel and hybrid cars will now be permitted after 2035. The UK is currently standing firm on its position regarding the 2030 combustion engine ban, however, there are whispers that the ZEV Mandate, which requires manufacturers ensure a certain proportion of their models each year up until 2035 are full-electric, could be relaxed somewhat.

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