Germany’s new coalition government is pushing ahead with a fast-tracked subsidy scheme aimed at boosting electric vehicle (EV) uptake among businesses, with a draft bill proposing generous depreciation allowances for newly purchased all-electric vehicles from mid-2025.
According to a legislative draft seen by local outlets including Handelsblatt, Tagesschau, and DPA, companies could be allowed to write off 75% of the purchase value of purely electric vehicles in the first year. Deductions would then decrease progressively to 10% in year two, 5% in years three and four, 3% in year five, and 2% in year six. The scheme would apply to EVs purchased between July 2025 and December 2027, pending cabinet and Bundesrat approval.
The proposed special depreciation scheme, part of a broader stimulus package, is intended to accelerate the electrification of commercial fleets. “This provides a strong tax incentive for companies and addresses a key element in the ramp-up of electromobility,” the draft states. The cabinet is expected to review the bill on June 4.
The initiative is part of the governing CDU/SPD coalition’s “immediate action programme,” which aims to quickly implement budgetary and growth-boosting reforms. The package includes broader tax cuts for businesses, such as a reduction in corporate tax and a new “investment booster” allowing 30% depreciation for other movable assets. Total relief from the proposed tax measures is estimated at €48 billion between 2025 and 2029.
Importantly, the EV depreciation measure is not limited to passenger cars. The bill applies to all fully electric vehicles, including commercial vans, trucks, and buses. This aligns with language in the coalition agreement, which references support for “e-vehicles” across sectors.
While the package also mentions acceleration in hydrogen infrastructure approvals, long-standing calls for simplifying approval procedures for EV charging infrastructure were notably absent. Nevertheless, further e-mobility measures, including tax exemptions on company EVs and extended vehicle tax breaks until 2035, are expected to follow.
As the plan affects not just federal but also state and municipal tax revenues, it will require Bundesrat backing. It remains unclear whether the proposal commands a majority in the upper house, even if the cabinet signs off without changes.