What buyers need to know about the new environmental bonusWhat buyers need to know about the new environmental bonus

Munich, 01 July 2020

As part of the Corona economic stimulus package, the federal government has decided to significantly increase the purchase premiums for electric cars and plug-in hybrids: In addition to the environmental bonus of up to 6,000 euros, half of which will be paid by the state and half by the car manufacturers, there will be an "innovation bonus" of up to 3,000 euros on top of this until the end of 2021. Thanks to a number of other subsidy programmes offered by the state, federal states and local authorities, the amount of the subsidy can even reach a significant five-digit figure. The amended directive on the promotion of sales of electric vehicles was published in the Bundesanzeiger on 7 July and therefore comes into force starting 8 July. The Mobility House explains what electric car buyers have to consider in order to receive these subsidies.

Who receives the environmental bonus?

The environmental bonus was already introduced in 2016. At that time there was a subsidy of up to 4,000 Euros for the purchase of a plug-in car. Since the start of the purchase bonus, it has been made up half each of a federal share and a manufacturer share. At the end of 2019, the government decided to increase the environmental bonus to up to 6,000 euros and to extend it until 2025. As a result of the "innovation bonus", introduced as part of the Corona economic stimulus package, the state share has now doubled, thus increasing the amount of the subsidy to up to 9,000 euros. However, the maximum purchase premium is only available for purely electric cars whose list price is below 40,000 euros. It should be noted, however, that the application for the environmental bonus can only be made if the purchase is not simultaneously supported by other public funds.

The exact amount of the subsidy is determined by the net list price of the basic model, which can be up to 65,000 euros, and the type of drive. There is more subsidy for pure electric and fuel cell cars than for plug-in hybrids. Surcharges for optional extras do not affect the amount of the purchase premium. The new subsidy rates can be applied retroactively for vehicles registered after 3 June 2020. 

Under certain circumstances it is even possible to subsidize a young used electric car - if the electric car was registered for the first time no more than 12 months ago and after 4 November 2019, has less than 15,000 kilometers on the clock and has not yet received an environmental bonus or state subsidy in another EU country. The increased subsidy also applies to young used vehicles with second registration after 3 June 2020.

Drive Net list price  Net environmental bonus until 12/2021 Net environmental bonus from 01/2022
Battery / fuel cell Up to 40,000 euro 9,000 euro  6,000 euro
Battery / fuel cell  40,000 – 65,000 euro 7,500 euro   5,000 euro
Plug-in-Hybrid   Up to 40,000 euro  6,750 euro 4,500 euro 
Plug-in-Hybrid 40,000 – 65,000 euro   5,625 euro  3,750 euro

Eligible for the environmental bonus are private individuals, companies, companies with municipal participation, foundations, corporations, and associations. Not eligible to apply are the federal government and the federal states as well as their institutions and local authorities, all public institutions of the state that fulfil the definition of a public-law contracting authority according to § 99 of the Act against Restraints of Competition (GWB), car manufacturers that participate in the financing of the environmental bonus as well as applicants whose assets are subject to insolvency proceedings or where proceedings have been opened.

How to apply for the environmental bonus?

Buyers of an electric car usually receive the manufacturer's share of up to 3,000 euros automatically, which is offset directly against the purchase price or as a special leasing payment. The up to 6,000 euros from the state are only available later on application. The vehicle must be purchased and registered before the application is made. The Federal Office of Economics and Export Control (BAFA) is responsible for the environmental bonus. The application must be made electronically using an online form, which can also be used to conveniently submit all the necessary documents. Since September 2020, there has also been a new collective application procedure and an automatic data exchange between the Federal Motor Transport Authority (KBA) and the Federal Office of Economics and Export Control. This should help to speed up the funding process. According to the BAFA, the innovation premium can now be applied for up to 500 vehicles of the same model in one go and the data can be retrieved automatically by vehicle identification number (VIN). 

Documents at purchase:

  • Invoice
  • Certificate of registration Part II (not neccessary for applications after 01.09.2020)
  • Declaration of truthfulness
  • For used cars: Proof package and proof of the list price of the new vehicle

Documents for leasing:

  • Leasing contract
  • Binding order
  • Calculation of the leasing rate
  • Certificate of registration Part II (not neccessary for applications after 01.09.2020)
  • Declaration of assignment (only for commercial leasing)
  • Declaration of truthfulness

In addition to the environmental bonus, an acoustic warning system (AVAS) installed in the vehicle is also eligible for funding. This system is already integrated in many electric cars and, according to EU law, must be included in all newly registered electric vehicles from July 1, 2021. In order to receive the 100-euro subsidy from the BAFA, the AVAS system must be included as standard equipment in the car at the time of purchase. However, it may also have been installed afterwards by an authorized workshop. 

After positive verification by BAFA, the subsidy is granted and paid out to the applicant's bank account. Important: The vehicle model must be on the list of eligible electric vehicles, which is available on the BAFA website and is updated regularly. On the BAFA website you can also find some more detailed information as well as a service number for queries.

VAT reduction until the end of 2020 increases the subsidy

Buyers of electric cars will also benefit from the reduction in value added tax from 19 to 16 percent, which is also part of the Corona economic stimulus package and will apply from 1 July until the end of 2020. Depending on the purchase price of the vehicle, additional savings of more than 1,000 euros are possible. In the case of the Renault Zoe, the savings already amount to 552 euros at a purchase price of 21,900 euros. 

The decisive factor here is the invoice date or the date of delivery of the vehicle. This must be delivered in the period between July 1 and December 31, 2020, as the date of performance, i.e. the date on which the vehicle is available, and the invoice date are identical for most car manufacturers. Especially in view of the sometimes rather long delivery times for electric cars, it makes perfect sense to order the new car now in order to be able to deliver it within this period.

Charging infrastructure is also supported

500 million in the expansion of private charging infrastructure. How exactly this will affect individual customers who want to install a charging station in their garage, for example, remains to be defined. However, many states and municipalities have already set up subsidy programmes, some of which are very attractive, which subsidize the purchase and installation of a charging facility, whether at home, at work or in the public sector. However, the conditions and amount of the subsidies vary greatly from state to state and municipality to municipality. The state of North Rhine-Westphalia, for example, subsidizes the installation of a charging point with up to 2,500 euros for private individuals, up to 4,500 euros for companies and up to 6,300 euros for municipalities. A further 500 euros per charging point is available if the charging infrastructure is at least partially operated with locally generated electricity. The establishment of a stationary battery storage facility is also rewarded: with 200 euros per kilowatt hour of storage capacity. 

An initial overview of the various programmes is provided by The Mobility House's funding database for electric mobility. There, interested parties can find detailed information, links to the respective funding projects and a practical search by postcode. For buyers of an electric car, it is sometimes worthwhile to inquire about electromobility funding programs from their community or local public utility company. For example, many local authorities offer free advice on switching to an electric car. And some cities and municipalities have also set up smaller subsidy programmes. Here too, however, buyers should pay attention to the ban on cumulation: regional or local subsidies for electric cars cannot be combined with the federal premium. 

Promotion via tax incentives

In addition to the direct promotion of electric cars and plug-in hybrids via the environmental bonus and subsidies from the federal states and local authorities, the state has set several other attractive incentives to support the sale of electric cars. For example, the motor vehicle tax for purely electric cars will now be abolished until 2030 (previously 2025) while tax rates for combustion engines will be adjusted upwards as consumption increases. And in the case of company car taxation, drivers of electric cars with a gross purchase price of up to 60,000 euros will now also benefit from the 0.25 percent taxation, which will enable savings in the significant four-digit range per year. This limit was previously set at 40,000 euros.