Minister: New German electric vehicle subsidy to 'boost' auto sector

Germany's new subsidy for electric vehicle purchases is a "boost" for the country's beleaguered carmaking sector, Environment Minister Carsten Schneider has said.

The policy was announced by Chancellor Friedrich Merz's government last autumn, with details being announced on Monday after negotiations between the coalition parties.

"This is a major boost for electric mobility in Germany," said Schneider. "And it is a boost for our domestic automotive industry, which offers powerful electric cars."

The new subsidy allows consumers to claim between €1,500 ($1,743) and €6,000 in government aid to buy an electric vehicle, with eligibility extending up to a maximum income of €90,000 for households with two children.

The scheme also covers plug-in hybrids - cars that run on both fossil fuels and electricity - and vehicles with range extenders, with a basic subsidy of €1,500 available.

To be eligible, the vehicles must not emit more than 60 grams of carbon dioxide (CO2) per kilometre and must have an electric range of at least 80 kilometres.

Germany's automotive industry, a central component of Europe's largest economy, has struggled in recent years amid rising costs and heavy competition from China.

But Schneider said that around 80% of electric cars and plug-in hybrids registered in Germany last year were produced in Europe, showing the strength of domestic manufacturers.

Amid concerns that Chinese companies such as BYD could flood the European market with cheap electric vehicles, Schneider said German carmakers are adapting to the competition.

"This year, more and even more affordable models from German manufacturers will come onto the market," he said.