German Automobile Dialogue: Government should rapidly adopt targeted measures for more affordable EVs

8 October 2025. The German government has a range of policy options at its fingertips to impactfully accelerate the broad-based adoption of EVs, including: purchase rebates; reduced-cost loans and leasing; measures to stabilise residual values; enhanced competition in the market for public charging infrastructure; and predictable CO₂ prices. Presuming vehicle ownership over a number of years, EVs have a cost advantage over conventional combustion engine vehicles under current conditions predominantly in premium price segments or when they can be charged using a home PV system. These are the key findings of a new total cost of ownership (TCO) study released by the think tank Agora Verkehrswende prior to the Federal Chancellory’s Automobile Dialogue (9 October).

“The Automobile Dialogue should be harnessed to finally place Germany on a robust path to e-mobility,” says Christian Hochfeld, Director of Agora Verkehrswende. “During the current legislative period, it is crucial to further increase consumer confidence in e-mobility so that well over half of all newly registered vehicles are EVs in the near future. The federal government has effective short-term policy tools at its disposal. Affordable EVs are not only essential for the widespread adoption of e-mobility, but also for strengthening the global competitiveness of the German automobile industry. EVs reduce reliance on expensive petroleum imports; they are also the most important tool for reducing transport-sector emissions, which are damaging to the climate and human health. If the government slows down the transition to e-mobility, this will exacerbate the risks to society, the economy, and the climate.” 

The study considers fifteen top-selling EV models from five vehicle segments, comparing total cost of ownership to equivalent gasoline and diesel models. It provides a detailed analysis of the factors influencing EV ownership costs while also considering how TCO changes under varying assumptions for key parameters, including annual driving distance, duration of ownership, use cases, and fuel, electricity, and carbon prices. The study, which compares 356 usage scenarios, provides policymakers with evidence-based insights to assess the impact of policy measures and ensure their optimal design for the encouragement of broad-based EV adoption.

Price incentives are crucial, especially for budget vehicles

According to the study, price incentives such as purchase rebates are the most effective measure for improving the economic competitiveness of EVs in relation to conventional vehicles. A price incentive of 6,000 euros would make EVs cheaper than comparable combustion engine vehicles in 87 per cent of the usage scenarios considered given an ownership period of five years, while a purchase incentive of 3,000 euros would have this effect in 54 per cent of cases. Accordingly, policymakers should consider reinstating the German EV purchase rebate scheme, potentially complemented by government-supported leasing and financing programmes, the study finds. In order to encourage the widest possible adoption of EVs, price incentives should apply in particular to affordable and efficient all-electric models. Additional support for used vehicle purchases could enable broader access to e-mobility for lower income households, who are generally reliant on used vehicles. 

Stabilising the residual value of EVs

Depreciation is the single largest component of total cost of ownership. EVs lose on average around 68 per cent of their value after five years. If the residual value of EVs were 20 per cent higher, they would be the cheaper option in 59 per cent of the usage scenarios. By contrast, if the residual value of EVs were to decline by 20 per cent, EVs would be more affordable than conventional vehicles in just five per cent of cases. 

“In order to stabilise the residual value of EVs, we need to increase confidence not only in the market, but also in the technical reliability of electric vehicles, particularly when it comes to batteries,” says Marion Vieweg, Senior Associate at Agora Verkehrswende.“ A clear commitment on the part of the German government to drive the adoption of e-mobility is essential in this regard. Debates concerning fleet-wide CO₂ limits and technological openness only fan consumer uncertainty – while also harming vehicle manufacturers over the long term.”

Affordable public charging and reliable carbon prices

When consumers are reliant on public fast-charging stations, EVs are more affordable than covenventional vehicles in a limited number of cases. Increased competition in the market for public charging infrastructure would help to reduce prices, the study concludes. In this connection, the German government should enhance implementation of existing regulatory requirements for price transparency and non-discriminatory market access, the study finds.

Highly volatile prices for gasoline and diesel represent a major cost risk for conventional vehicles that can make EVs comparatively more attractive. If fuel prices were 20 per cent higher, EVs would be cheaper than combustion engine vehicles in nine per cent of cases in which charging is done at public fast-charging stations – a threefold increase compared to the medium price scenario. According to Agora Verkehrswende, a reliable and rising carbon price that internalises the true costs to society of fossil fuel consumption would create an additional economic incentive for consumers to choose EVs and reduce their dependence on oil imports. 

Find out more 

The main outcomes of the study (in English) and the full study (in German) are available for free here.