How could Germany’s new EV incentives impact residual values?

22 January 2026

Purchase incentives for new electric vehicles (EVs) have been announced in Germany. But how will they work, and what are the implications for the used-car market? Tom Hooker, Autovista24 journalist, discussed the topic with Autovista Group experts.

For the first time since December 2023, government-funded EV incentives will become available in Germany. However, unlike previous subsidies, the new scheme will be income-dependent. Battery-electric vehicles (BEVs), plug-in hybrids (PHEVs) and extended-range electric vehicles (EREVs) are eligible for the incentives.

The subsidy scheme comes as EVs recorded 49.6% registrations growth in 2025. This was a significant improvement from a 18.2% decline in 2024, the year after incentives ended.

Funding applications can be submitted through an online portal, expected to open in May 2026. Incentives can be applied retroactively from 1 January 2026. A total of €3 billion has been allocated to the scheme. The government projects this will allow for around 800,000 vehicles to receive subsidies between 2026 and 2029.

The incentive will be available for both buying and leasing applicable models, regardless of list price. All vehicles receiving the subsidy must be kept for at least 36 months.

So, how is the announcement expected to affect Germany’s automotive market? Will it impact specific segments more than others? Could it influence residual values (RVs)?

Scaling incentives

The subsidy is expected to scale with taxable household income and family size. It is also dependent on the vehicle’s powertrain.

For households with an annual income between €60,001 and €80,000, a BEV subsidy of up to €3,000 will be offered. This increases to €4,000 for households earning between €45,001 and €60,000. €5,000 will be made available for households with a yearly income of up to €45,000.

BEV buyers can also benefit from an additional subsidy worth €500 per child, up to a total of €1,000. However, these amounts are lower for PHEVs. For example, those with a household income between €60,001 and €80,000 will only receive a base subsidy worth €1,500.

Additionally, households with an income between €80,001 and €85,000 will only be allocated funds if they have at least one child. At least two children per household are required to receive subsidies if annual earnings sit between €85,001 and €90,000.

Therefore, the full €6,000 support will only be available for households below a taxable income of €45,000, or €22,500 per person for couples. On top of this, they must have two children and be purchasing a BEV.

This means that only a small share of German new‑car buyers will qualify for the maximum amount, especially in the BEV-relevant price classes. 

Lower incomes not supported?

‘The new German incentive scheme is unlikely to support citizens with lower incomes,’ said Christian Schneider, director of valuations at Autovista Group.

‘Even if BEVs reach price parity with new internal-combustion engine (ICE) vehicles, prices for all powertrains have been rising significantly. This means that most people from this income class cannot afford a new vehicle,’ he explained.

‘Additionally, this new scheme is creating pressure on BEV RVs. In turn, leasing rates will also not fully benefit from this incentive.

‘There would have been smarter ways to invest this money. A more effective implementation could increase electrification, stimulate new and used-car demand, and support a wider range of citizens. For example, the funds could have been used to invest in charging infrastructure or incentivise charging prices,’ commented Schneider.

Incentives impact residual values

Autovista Group experts forecast that the strongest negative RV impact from the incentives will be faced by BEVs. This forecast is accordingly adapted to experts’ observations of new-car sales and incentives.

In December 2025, a decline of 1.9% in BEV RVs expressed as a percentage of retained list price (%RV) was predicted in 2026.

This will be driven by two effects. First, the powertrain is projected to experience pressure on prices in the short term. As new-car list prices drop due to the incentives, this can lead to lower used-car prices as the market adjusts. Second, Autovista Group experts forecast that there may be an oversupply of BEVs in the medium term.

Subsidised new registrations typically create a wave of used BEVs returning to the market simultaneously after two to four years. This can cause longer stock days and declining RVs when vehicles enter the used-car market. Some European countries with early, aggressive subsidies have already felt the impact of this trend.

Additional BEV effects

Vehicles in the €30,000 to €45,000 price band will likely be most affected by the subsidies. This price range includes many compact crossovers and other BEVs aimed at the mass market. In this bracket, Autovista Group experts project that the incentives will significantly alter price positioning.

The scheme may also only provide a limited uplift to BEV demand. This is because households earning below €45,000 are unlikely buyers of new BEVs, or indeed any new car. Buyers in this demographic would be more likely to consider smaller or inexpensive models.

Additionally, it is more likely that households in this income bracket will opt for used vehicles. Even then, they can be expected to choose older models.

The reintroduction of state support may prompt OEMs and dealers to reconsider their discounting strategies. After the previous BEV subsidies expired in December 2023, discounts increased. In turn, this could further moderate the real purchase incentive felt by buyers.

However, this may help regulate short-term pressure on BEV RVs. This is despite the powertrain likely being the most affected by the incentives.

Other powertrains influenced?

Autovista Group experts also project that PHEVs will see a slight RV impact. It will likely be more moderate than the effect on BEVs. This is because the technology will receive lower subsidies while holding a smaller market share. It also has a lower future oversupply risk than all-electric models.

The ICE market, which includes petrol and diesel models, is forecast to see a limited but varied incentive impact. In the short term, young used ICE cars may see a slight downward pressure on RVs. This will be caused by BEVs becoming temporarily more competitive.

In the medium-to-long term, structural supply shortages may appear in the used market. This could cause stable or even rising RVs for ICE models. Moreover, declining petrol and diesel registrations and tightening emissions rules could support ICE RVs structurally. Reduced model availability could also encourage this trend.