Italy launches €600 million electric-vehicle subsidy scheme amid lagging sales

On August 8, 2025, Italy’s Environment and Energy Ministry unveiled a fresh subsidy program worth nearly €600 million (approximately $698 million) to stimulate electric vehicle (EV) purchases. This initiative comes as EV adoption in the country remains notably slow.

Under the program, individuals can receive up to €10,000, while small businesses can get as much as €20,000-equivalent to covering 30 percent of the purchase price for a new electric car or commercial vehicle.

To qualify, applicants must scrap an internal combustion engine vehicle of up to Euro 5 emission class-from 2015 or earlier-ensuring older, more polluting vehicles are taken off the road.

The subsidies are financed through European Union post-COVID recovery funds and are aimed specifically at individuals and companies located in large urban areas. The goal is to reduce pollution and improve air quality in cities. Despite policy efforts, EV adoption remains lackluster.

As of June, battery electric vehicles accounted for only 6 percent of new car sales in Italy-well below the EU average of over 15 percent. Looking ahead, the broader EU plan to phase out new petrol and diesel car sales by 2035 will be reviewed next year.

This comes in response to mounting pressure from both the automotive industry and several national governments seeking to slow the pace of the transition.

Italy's 6 percent EV share of new car sales versus the EU 15+ percent average reflects the affordability and infrastructure gaps that Italian consumers face. €10,000 individual and €20,000 small-business subsidies (30 percent of purchase price) combined with mandatory scrappage of pre-2015 vehicles addresses both cost and fleet-turnover dimensions simultaneously - potentially delivering meaningful adoption acceleration.

The urban-area focus is analytically defensible - air quality is worst in dense urban environments, EV benefits (no local emissions) are highest there, and charging infrastructure is more developed in cities. But it risks perpetuating rural-urban divides in EV access that longer-term policy will need to address. EU 2035 phase-out review will test whether current transition pace is sustainable.

For automotive OEMs, EV manufacturers, charging-infrastructure operators and financial institutions supporting European sustainable-mobility investment, Cognitud's climate action, market intelligence and responsible investment teams help clients evaluate exposure to EV-subsidy timing and scope changes, structure long-term commercial arrangements robust across policy variability, and prepare disclosures aligned with CDP Auto, ISSB and jurisdictional automotive-sustainability frameworks.