Germans switch to EVs at record pace thanks to government bonus

More German drivers switched to an electric vehicle (EV) in the first quarter of 2026 than ever before after the government launched a major subsidy programme that can shave as much as €6,000 (S$8,916) off the price of a new car.

The share of drivers replacing their combustion-engine cars with an EV rose to 7.5 per cent in the period, from 6.3 per cent the previous quarter, according to a survey for insurer HUK-COBURG published on May 28. That was the highest figure since the poll began in early 2020.

About a fifth of respondents cited the new subsidy as having a direct impact on their purchase, while just over 10 per cent said the state aid meant they were considering purchasing an EV for the first time.

German Chancellor Friedrich Merz’s ruling coalition introduced new purchase and leasing incentives for zero-emission vehicles worth €3 billion from the start of 2026 through 2029 and targeted at low- to middle-income households.

As well as EVs, they also apply for plug-in hybrids and cars with range extenders, part of a broader effort to support the nation’s auto sector as it struggles with high energy costs and strengthening Chinese competition.

European manufacturers have been grappling with uneven EV demand in recent years and are lobbying hard against the European Union’s carbon-emissions rules to try to ease mounting pressure on the industry.

They are also hamstrung by structural disadvantages including limited access to locally made batteries and tangled bureaucracy, while drivers are facing a surge in fuel costs due to the Middle East conflict.

Mr Jorg Rheinlander, a HUK-COBURG board member responsible for motor insurance, said the German subsidy “is clearly having an impact within the target groups”.

The programme provides subsidies of between €1,500 and €6,000, depending on the vehicle and a family’s size and earnings, and the government estimates the funds allocated will be enough for about 800,000 cars.

“There are therefore strong indications that extending this subsidy to used electric cars as well could significantly reinforce this trend,” Mr Rheinlander added.

HUK-COBURG’s quarterly survey is based on data from 14.5 million insured vehicles and responses from about 4,000 people to an online poll. BLOOMBERG