German subsidy sparks record shift from gas cars to EVs as discounts hit $7,000

Germany’s new electric vehicle subsidies are already encouraging more drivers to switch from gas-powered cars to electric models.

According to a report from Insurance Journal, in the first quarter of the year, the share of German drivers replacing combustion-engine vehicles with EVs reached a record high.

A new survey conducted for insurer HUK-COBURG found that 7.5% of German drivers who replaced a car in the first quarter chose an electric vehicle, up from 6.3% a quarter earlier. The survey draws on information from 14.5 million insured vehicles and about 4,000 respondents.

The increase followed Germany’s rollout of a new subsidy program at the beginning of the year. Depending on the vehicle and the driver’s household income and size, buyers can get €1,500 to €6,000 (roughly $1,740 to $6,960) off the price of a new electric vehicle.

About a fifth of survey respondents said the subsidy played a direct role in their purchase decision. Just over 10% said the incentive prompted them to consider an EV for the first time, Insurance Journal noted.

The incentive program from Chancellor Friedrich Merz’s coalition is worth €3 billion ($3.5 billion) and is set to run through 2029, targeting low- to middle-income households. It applies to EVs, plug-in hybrids, and cars with range extenders, and the funding is expected to cover roughly 800,000 vehicles.

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

While EVs often come with higher upfront prices than gas-powered cars, drivers can typically offset those costs through lower maintenance expenses and fuel savings. Incentive programs like this can further reduce the initial investment, making the switch to an EV more affordable and financially rewarding over time.

If you’re considering making the switch, check out this helpful guide to get started. 

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