Germany’s €3 Billion EV Reboot Opens the Door to BYD and Other Chinese Makers

Key highlights

• Germany launches a €3b EV subsidy program open to all brands, including Chinese automakers.
• Incentives range €1,500–€6,000; base support is €3,000 for BEVs.
• BYD sold ~23,000 vehicles in Germany in 2025; Volkswagen sold 102,339 BEVs.
  
   

Germany is rebooting electric vehicle incentives with a €3 billion program designed to get buyers back into showrooms, and it is doing it without the eligibility filter many expected. The subsidies will be open to all manufacturers, including Chinese brands, as Berlin tries to revive demand in Europe’s largest car market after the previous scheme ended in late 2023. 

The government’s stance was summed up by Environment Minister Carsten Schneider, who said he does not see evidence of a surge of Chinese vehicles in Germany. “I cannot see any evidence of this postulated major influx of Chinese car manufacturers in Germany, either in the figures or on the roads,” he said at a press conference on Monday. Schneider argued Germany should meet the competition rather than restrict it, adding he is confident in the quality of European and German brands. 

That is the bet behind the policy reset: stimulate EV adoption first, and let the market fight play out on price, product and service.

What the subsidy looks like

Germany’s plan is built around a clear set of numbers and a targeted audience, leaning toward low to middle income households.

• Incentives will range from €1,500 to €6,000 per household, depending on household income, family size and vehicle type. (CnEVPost)
• The base incentive is €3,000 for battery electric vehicles and €1,500 for plug-in hybrids and range-extended vehicles, Schneider said. (CnEVPost)
• Vehicles registered as new since January 1, 2026 qualify retroactively. (CnEVPost)
• The taxable income threshold is €80,000, rising by €5,000 per child to a maximum of €90,000. (CnEVPost)
• The program is expected to support purchases of around 800,000 vehicles through 2029. (CnEVPost)
  
   

Alongside the purchase incentives, Germany’s coalition has also extended an EV tax exemption through 2035, with an estimated fiscal cost of €600 million in lost revenue through 2029. 

The China question: still small, but not invisible

Germany’s decision to include Chinese brands inevitably sharpens attention on market share, and the current numbers explain why Schneider feels comfortable with his “no flood” argument.

Chinese automakers remain a modest slice of Germany’s EV story, even after a year of growth.

• BYD sold about 23,000 vehicles in Germany in 2025, giving it less than 1% market share, according to the figures cited. (CnEVPost)
• BYD recorded a monthly high of 4,109 registrations in December. (CnEVPost)
• XPeng saw German sales rise to 426 units in December, bringing its full-year total to 2,991 vehicles. (CnEVPost)
• Leapmotor, backed by Stellantis, sold 851 vehicles in Germany last year. (CnEVPost)
  
   

Source: KBA

For context, the local leaders are still operating at a different scale in pure battery electrics:

• Volkswagen sold 102,339 battery electric vehicles in Germany in 2025, followed by BMW with 51,878 and Skoda with 50,823. 

The takeaway is not that Chinese brands are dominant. It is that they are building a foothold, and the subsidy framework will now sit directly on top of that trendline.

BYD’s Showroom in Stuttgart, Germany 

What changes for German and European carmakers

Opening subsidies to all brands increases the pressure on incumbents in the most practical way possible: it narrows the “policy gap” that can otherwise cushion higher-priced models.

If a buyer can apply the same incentive to a sharply priced import as they can to a domestic badge, the contest shifts quickly to:

• upfront price and financing bundles
• range, charging and real-world efficiency
• features and software experience
• delivery timelines and model availability
• after-sales support and warranty confidence
  
   

Germany’s government is effectively signalling that EV uptake is the priority, even if that means sharper competition at the bottom and middle of the market.

A policy line that differs from parts of Europe

Germany’s decision also stands out because other markets have taken more indirect approaches that, in practice, screen out some Chinese-made vehicles through eligibility standards tied to production and supply chain requirements. Berlin has chosen not to go down that route, at least for this program. 

That does not mean Chinese brands enter tariff-free. Chinese manufacturers still face European Union tariffs on imported EVs, which remain a cost headwind even with subsidies available. 

What to watch next

The policy is big enough that its effect should show up quickly in the data.

1. Registration momentum in early 2026: whether demand lifts sustainably or spikes and fades.
2. Brand mix: whether Chinese brands take a larger share of subsidised purchases than their current presence suggests.
3. Response from incumbents: price adjustments, promotions, or accelerated model updates.
4. Political temperature: whether the “open to all” design becomes a domestic controversy if the optics shift.
   
    

Germany has set the rules for a more open contest. The next chapter will be written in monthly registrations, pricing moves, and whether buyers treat the new incentives as a nudge or a turning point.