Chancellor Angela Merkel's office said officials and industry representatives agreed late Monday to increase by half the existing government incentives for electric vehicles with a list price of 40,000 euros ($44,500).
German news agency dpa reported that half of the subsidy, in future amounting to 6,000 euros, will be borne by industry.
The subsidy will also be extended from the end of 2020 currently to the end of 2025.
Government and industry also agreed to aim for 50,000 publicly accessible charging stations nationwide by 2022.
The announcement came as German automaker Volkswagen began mass production of its ID.3 electric car in the eastern town of Zwickau.
Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.