German Bundestag Extends EV Tax Exemption Until 2035 to Boost E-Mobility

Bundestag Approves Extended Tax Relief for Electric Vehicles

The German Bundestag has officially voted to extend the exemption from vehicle tax for electric cars, a move designed to further accelerate the adoption of e-mobility across the country. The decision, made on December 4, 2025, prolongs the tax relief until the end of 2035. This legislative change applies to electric vehicles that are first registered by December 31, 2030.

Under the previous regulations, the tax exemption for newly registered pure electric cars was set to expire on January 1, 2026. The extension ensures that eligible vehicles will benefit from a tax exemption for up to ten years, though this period will not extend beyond December 31, 2035. Consequently, electric cars registered later in the eligibility window, such as in 2030, will receive a shorter exemption period.

Strategic Incentives for a Greener Future

The extension of the tax exemption is a key component of the German government's strategy to bolster the automotive industry, secure jobs, and meet climate targets. Federal Finance Minister Lars Klingbeil (SPD) has been a vocal proponent of the measure, stating, 'In order to get many more electric cars on the road in the coming years, we need to provide the right incentives now. That is why we will continue to exempt electric cars from vehicle tax.'

This initiative follows the abrupt termination of direct purchase subsidies, known as the 'Umweltbonus,' in December 2023, which had led to a noticeable decline in electric vehicle sales. The government hopes that this long-term tax incentive will provide stability and confidence for both consumers and automakers.

Financial Implications and Parliamentary Debate

The extension of the vehicle tax exemption is projected to result in a significant revenue shortfall for the federal government. According to estimates from the governing coalition, this loss could amount to approximately 1 billion euros. The Ministry of Finance provided more specific figures, anticipating losses of €45 million in 2026, rising to €105 million in 2027, €180 million in 2028, and up to €370 million by 2030.

During the parliamentary vote, the decision was not unanimous. The AfD (Alternative for Germany) was the sole parliamentary group to vote against the law. Hauke Finger, an AfD lawmaker, criticized the federal government, accusing it of 'throwing this money out the window on a whim.' Conversely, CDU lawmaker Stefan Korbach defended the sum as justifiable, emphasizing its role in facilitating electromobility adoption and strengthening the automotive industry and its suppliers.

Broader Context of E-Mobility Support

The extension of the tax exemption is part of a broader package of measures aimed at promoting electric mobility in Germany. These include:

• Special depreciation rules for company BEVs (40% in year of purchase) applied retroactively from July 1, 2025, and remaining in force through 2028.
• An increase in the gross price limit for tax incentives for electric company cars from €70,000 to €100,000.
• Ongoing efforts to expand the nationwide public charging network.

Additionally, discussions are underway for a new targeted subsidy program, expected to commence in January 2026, which would offer purchase incentives of up to €4,000 for low- and middle-income households, potentially including used electric cars.