Germany revives EV subsidies and reforms transport amid industry shifts
Germany is bringing back subsidies for electric and hybrid vehicles as part of a renewed push for greener transport. The move aims to support lower-income buyers and larger households, while new rules and market shifts reshape the automotive industry. Meanwhile, major changes are underway at Deutsche Bahn under its new leadership.
From early December 2025, Evelyn Palla took charge as the new CEO of Deutsche Bahn. She began rolling out major reforms on January 1, 2026, but has warned that improvements will not happen overnight.
In the automotive sector, electric cars are becoming more affordable. Price parity with combustion-engine models has already been reached in some commercial fleets, and the gap continues to narrow. By April 2026, Volkswagen will launch the ID.Polo, a small electric car, with the even cheaper ID.1 (priced at €20,000) set to follow in 2027. The government’s new subsidy scheme will prioritise social equity, offering financial support to lower-income buyers and larger families. Hybrid vehicles will also see renewed incentives, though the exact details are still being finalised. Additionally, a compromise on the phase-out of internal combustion engines now requires automakers to meet 90% of the original emissions target. Regulatory changes are also in effect. The Euro 7 emissions standard now includes stricter controls on fine particulate matter from tire wear and the lifespan of traction batteries. Meanwhile, the weight limit for certain vehicles has increased from 3.5 to 4.25 tons, though inconsistencies in the new rules remain. In business news, Pierer Mobility, the Austrian company behind KTM motorcycles, filed for bankruptcy and was acquired by India’s Bajaj.
The return of EV subsidies and upcoming affordable models like the ID.1 aim to accelerate Germany’s shift to electric transport. Deutsche Bahn’s reforms under Evelyn Palla will take time, while stricter emissions rules and weight adjustments add new challenges for automakers. The takeover of Pierer Mobility by Bajaj marks another shift in the global mobility sector.
