BERLIN — Germany’s electric vehicle subsidy scheme is running out of money far faster than the government anticipated.
The program was supposed to last until 2029, but at the current rate of spending its entire €2.7 billion budget could be gone by the end of 2027, according to a document prepared for final negotiations on Germany’s 2027 federal budget and seen by WELT, a sister publication of POLITICO in the Axel Springer Group.
“The EV subsidy scheme is developing far more dynamically than anticipated when it was designed and its funding requirements were originally calculated,” the document states.
The budget allocation is being adjusted, but “without changing the overall size of the program.”
According to government estimates, the funding is enough to subsidize around 800,000 vehicles. Buyers can receive government grants of up to €6,000 per vehicle.
In early October, Germany’s BAFA export control agency, which administers the scheme, said it had already approved 100,000 applications and paid out more than €430 million.
If applications continue at the same pace, spending could reach €1 billion in 2026. The federal budget originally earmarked just €803 million for the scheme in 2027, but the government now expects to pay out €1.7 billion — draining the fund.
So far, the government has given no indication of whether it intends to put more cash into the program.
Environment Minister Carsten Schneider said in October that demand had exceeded all expectations. At the same time, he sought to reassure prospective buyers that there is enough money in the program to continue funding through 2027.
“Anyone who decides to buy a battery-electric vehicle now and meets the eligibility criteria need not worry about next year either,” Schneider told Auto Motor Sport magazine.
However, the application process does pose risks for car buyers facing long delivery times. Government subsidies are not reserved when customers place an order at a dealership, but are only granted once the vehicle has been registered for the first time.
Electric vehicle sales are soaring in Germany. More than 94,000 new EVs were registered in October for a record market share of 37%, according to the Federal Motor Transport Authority.
“The market is booming — but it is booming primarily because of the subsidy,” Constantin Gall, an automotive expert at the EY consultancy, told the AFP news agency.
The real test, he said, would come when the money runs out. “I expect electric vehicle registrations to fall sharply again, just as they did in 2024 after the subsidy was discontinued in December 2023.”