Germany extends EV tax break to 2035

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Igor Krasulya

07.10.2025

Germany extends EV tax break to 2035 — New electric cars stay tax-exempt until 2035

The German government plans to extend the vehicle tax exemption for electric cars until 2035, in a renewed effort to accelerate the country’s transition to clean mobility.

Finance Minister Lars Klingbeil announced a draft law to prolong the tax break, which had been set to expire in 2026, saying the measure aims to “get many more electric cars on the road in the coming years”, reports Handelsblatt.

Under the proposal, newly registered electric vehicles would remain exempt from motor vehicle tax until December 31, 2035, with eligibility applying to cars first registered by the end of 2030. The Ministry of Finance said the extension is designed to “provide an incentive for the early purchase of a purely electric vehicle.” However, the plan will cost the government several hundred million euros in lost revenue.

Political and economic context

The extension was part of a broader coalition agreement between the CDU, CSU, and SPD to strengthen Germany’s automotive sector, which faces mounting competition from China and the U.S. The measure had appeared uncertain earlier this year due to tight budget constraints, but Klingbeil’s confirmation signals renewed political will to support the industry.

The decision coincides with an “automotive dialogue” summit at the Chancellery, where Chancellor Friedrich Merz will meet representatives from federal ministries, state governments, automakers, and unions. The discussions are expected to cover both domestic policies and international issues, including tariffs and declining car sales in China.

Toward a cleaner automotive future

Klingbeil framed the policy as part of Germany’s broader effort to preserve its industrial leadership amid global transformation. “We must now put together a strong package to lead the German automotive industry into the future and secure jobs,” he said. “Everyone knows that the future is electric.”Beyond tax incentives, the government is also considering social mobility programs modeled on France’s “social leasing” scheme to make electric vehicles more accessible to low- and middle-income households.

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