09 June 2025
The German government has introduced fresh incentives aimed at accelerating corporate electrification. But what support is there for the used electric vehicle (EV) market? Dr Christof Engelskirchen, chief economist at Autovista Group, explores the impact of these measures.
In a renewed effort to accelerate the transition to electric mobility, the German government has unveiled a suite of measures. The corporate fleet sector appears to be a central target of this latest approach. Part of the broader ‘Responsibility for Germany’ programme, this initiative marks a pivot from consumer subsidies to structural incentives and industrial support.
Key elements of the plan include accelerated depreciation for electric company cars. There are also extended vehicle tax exemptions for EVs until 2035, and streamlined permitting for charging infrastructure. These measures are designed to ease the financial burden on businesses and encourage fleet electrification. This is a welcome shift, albeit one that still leaves critical gaps.
‘The higher tax depreciation rates only apply to companies purchasing vehicles for inclusion in their business assets,’ explained Robert Madas Autovista Group’s regional head of valuations. Companies and consumers leasing BEVs will only benefit if leasing companies pass on the tax advantages through more favourable rates.
Carrot and stick approach
Over the past year, the carrot-and-stick approach to driving EV adoption has leant heavily towards the stick. That stick was hitting OEMs hard.
There has been little stimulus for drivers to choose an EV over an internal-combustion engine (ICE) model. One notable exception to this rule is company car drivers. They still benefit from a substantial cut in benefit-in-kind taxation when choosing a battery-electric vehicle (BEV) over an ICE model.
Private individuals had little incentive to go electric, whether purchasing a new or used vehicle. This is underlined by registration numbers and the powertrain mix.
BEV registrations fell massively in the first months of 2024 after the expiry of state subsidies. However, all-electric registrations have seen year-on-year growth of 43.2% so far this year, pushing the powertrain’s market share to 17.6%.
‘So, there has been development without subsidies, especially among fleets,’ Madas pointed out. ‘One of the reasons is improved affordability.’
BEVs are now in almost every vehicle segment and often reach a price close to conventional ICE powertrains. Furthermore, many companies have implemented ESG guidelines in favour of BEVs. Company car drivers can profit from a substantial cut in benefit-in-kind taxation.
Miss for used EV market
With these proposals, the German government is supporting EV adoption within company car fleets. This will help boost the EV share of Germany’s new-car market. The measures will also provide relief to carmakers facing mounting pressure from the EU’s industrial policy and CO₂ fleet targets.
However, the policy falls short of addressing the used EV market, which is a critical component for long-term adoption. The German government has missed an opportunity to increase the attractiveness of used EV ownership. An increase in new-vehicle supply, without stimulating the demand for used models is not ideal.
Furthermore, stimulating EV leasing may increase new registrations to a level that used-car markets are unable to absorb in three or four years. That is an additional risk for residual values (RVs).
Three measures for used EVs
There may still be time to bolster demand for used EV ownership. To achieve this, a three-pronged approach is needed. The first is bringing down electricity costs. The German government proposed a measure with this in mind as part of its recent 2025 coalition agreement. This needs to be implemented swiftly.
Second, the ramp-up of charging infrastructure needs to be sped up. Increasing competition in this space will help lower high electricity costs at public charging points. This can cost three times as much as at a private wall box.
Third, driving electrification is not just about incentivising EVs, but disincentivising ICE ownership. Governments can put measures in place to increase the costs of ICE ownership. Europe’s leading EV market, Norway, has already shown has this can work.
Looking ahead, a coherent and transparent roadmap is needed. Germany needs a combination of measures to drive EV adoption which need to be decisive and impactful. These tactics can be implemented over time and can even be modified if necessary. The key is making the plans clear and comprehensible so people can get on board with them.
There is still a lot of consumer uncertainty about the transition to EVs, and whether it will actually happen. This is driving angst about making the electric switch. As Germany recalibrates its EV strategy, the success of these measures hinges not only on their economic impact, but on their ability to build public confidence in the electric future.
