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Electric cars on the rise: Federal government promotes purchases with tax tricks!
The federal government is promoting e-cars with tax breaks to stimulate the market by 2028 and promote investment.
Electric cars on the rise: Federal government promotes purchases with tax tricks!
In the last few days, a new regulation to promote electric cars has caused a stir and a breath of fresh air in the automotive industry. Finance Minister Merz has put together a billion-dollar package that is intended to offer companies significant tax advantages in order to increase the attractiveness of electric vehicles. Companies can currently write off up to 75% of the costs of a new electric car used for business purposes in the first year. The year after that it is 10%, followed by 5% in each of the next two years, and finally 3% in the fourth and 2% in the fifth year. This special regulation applies to purchases made between June 30, 2025 and January 1, 2028. This is intended to boost sales of electric cars, which plummeted after the funding ran out at the end of 2023. According to Merkur, only 3% of private vehicles in the first quarter of 2025 were pure electric cars, and growth in the private sector was only 0.1% compared to the previous quarter.
However, there is positive news in the company car segment: companies are now responsible for the majority of new registrations. Of the newly registered electric company cars, 64% come from German manufacturers such as VW, BMW, Mercedes and Audi. The VW Group leads here with the most registrations, with the VW ID.7 and the Skoda E-SUV Enyak enjoying particularly high popularity. As a result, electric registrations for company cars increased by an astonishing 45% in the first quarter of 2025 compared to the previous year, as the Tagesschau reports.
Tax relief to promote e-mobility
In order to further improve the situation, the federal government is planning tax breaks specifically for fully electric company cars. This includes reduced tax rates to just 0.25% for vehicles up to 95,000 euros. These measures are intended to help reduce the high acquisition costs that have previously prevented many companies and individuals from purchasing. The environmental bonus expired in August 2023 and led to a 69% decline in new registrations compared to the previous year. The BR reports that experts from EY and CAR are concerned about weak demand caused by insufficient financial support.
The new tax measures aim to achieve a real breakthrough for electric cars by 2028. The special depreciation should offer tangible advantages over the next few years, so that many companies can use these incentives to specifically invest in electromobility. The tax advantages also make the leasing options more interesting, as companies may be able to lease their electric vehicles more easily without having to incur high acquisition costs. It is also planned that there will be no vehicle tax for electric cars by 2035, which will make long-term planning easier for companies.
It remains to be seen whether and how quickly these measures can actually drive up the numbers. One thing is clear, however: the federal government seems determined to give electromobility in Germany a strong boost. The market is eagerly awaiting developments and whether the big business with electric cars will be worthwhile for everyone involved in the future!