View photosMoreA battery charger sign for electric cars is painted on the ground of a parking ground near the soccer stadium in Wolfsburg, Germany, April 6, 2016.
Under the new plans, electric cars will be exempt from paying vehicle tax for ten years with retroactive effect from Jan. 1, 2016.
Employees who charge their electric vehicles at work will also pay a reduced tax rate of 25 percent on this non-cash benefit, the Finance Ministry said.
The tax breaks come on top of plans agreed last month between government ministers and the car industry to give buyers of electric cars a 4,000 euro incentive, while buyers of plug-in hybrid cars will get a premium of 3,000 euros.
Germany, the biggest carmaker in Europe, currently has only about 50,000 purely battery powered vehicles and plug-in hybrids among the 45 million cars using its roads.
The government hopes the new incentives will help sell an additional 400,000 electric cars.