German Federal Finance Minister: “We will continue to exempt EVs from car tax”

The German government intends to extend the car tax exemption for electric vehicles (EVs) until 2035.

Federal Finance Minister Lars Klingbeil (SPD) told the German Press Agency (DPA):

“In order to get significantly more electric cars on the road in the coming years, we must now set the right incentives. That’s why we will continue to exempt EVs from car tax.”

Klingbeil announced he would present a draft law to this effect.

As things currently stand, the tax exemption for newly registered purely EVs would no longer apply from 1 January 2026. However, this regulation is now to be extended by five years.

The legislative amendment aims to provide a tax advantage for owning purely electric vehicles first registered by 31 December 2030.

The maximum ten-year tax exemption is to be limited to the end of December 2035, in order to encourage the early purchase of a purely electric vehicle, according to the Finance Ministry.

The measure involves an amendment to the Motor Vehicle Tax Act.

As a result of the extension, the federal government expects a decrease in tax revenues.

For the year 2026, the loss is estimated at 45 million euros. In subsequent years, the expected losses increase – to 105 million euros in 2027, 180 million euros in 2028, and up to 370 million euros in 2030.

German automotive industry to meet at “Car Summit” on Thursday

Klingbeil described the car tax exemption as one component of the measures to be discussed at the “Automobile Dialogue” on Thursday, to which Chancellor Friedrich Merz (CDU) has invited stakeholders.

“We now need to put together a strong package to lead the German automotive industry into the future and to secure jobs. We want the best cars to continue being built in Germany.” The automotive industry is undergoing a major transformation. “Everyone knows the future is electric.”

The meeting at the Chancellery will be attended by several federal ministers, representatives from federal states, the automotive industry, and trade unions.

It is woth mentioning that the car industry is currently grappling with sluggish sales, competition from China, and the shift to electric mobility. In addition, there is an ongoing trade dispute with the United States.

Many companies are cutting costs and reducing staff.

Automotive Association warns against setback for E-Mobility

The President of the German Association of the Automotive Industry (VDA), Hildegard Müller, had demanded that the coalition quickly ensure the extension of the car tax exemption for purely EVs until 2035 – as promised in the coalition agreement.

“The tax exemption has proven to be an effective incentive for the purchase of electric vehicles, but it would no longer apply to new registrations from 1 January 2026 – with significant consequences for the continued ramp-up of e-mobility for both passenger cars and commercial vehicles.”

A spokesperson for Klingbeil had said more than a week ago that the implementation of the tax exemption extension announced in the coalition agreement was currently being reviewed.

At the “Car Summit”, the government could introduce further measures.

The coalition agreement between CDU, CSU, and SPD mentions a “programme for households with low and medium incomes” to specifically support the transition to climate-friendly mobility.

A similar “social leasing programme” already exists in France, involving government subsidies for leasing electric cars.

Source: Handelsblatt

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