Is vehicle development eligible?

Yes, if the behaviour of a drivetrain, battery system or driving function was open before the first test. OEMs and suppliers are treated alike: 25 % of the assessment basis, 35 % for SMEs; for contract research commissioned after 27 March 2024, 17.5 % or 24.5 % of the fee before the additional flat rate (Section 4 (1) FZulG).

Automotive & Mobility R&D Tax Credit 2026

In the automotive sector the scope of the project decides, not the vehicle's spec sheet.

The certification office does not assess how much software or how much battery sits in a vehicle, but whether a technical question was open beforehand and answered systematically. A supplier rarely loses an application on the technology; usually it is lost because contract development to OEM specification and own development sit in the same project.

Rates, costs and limits

The essentials on the research allowance in vehicle development

Funding rate: 25% of the assessment basis, 35% for SMEs. For projects started after 31 December 2025, a 20% flat rate increases the assessment basis (Section 3 (3b) FZulG); the EUR 12 million cap still applies (Section 3 (5) FZulG).
Eligible: Novel drivetrain, battery and control concepts, autonomous driving functions, lightweight structures and manufacturing processes. What counts is not the industry but whether novelty, technical risk and systematic approach can be demonstrated.
What counts: The employer gross salary of development, simulation and test engineers for the hours spent on the project. Since 2024 also the depreciation of movable assets used exclusively for the project, such as a battery test rig. Material for the prototype itself is not eligible.
Ceiling: Assessment base of EUR 12 million per financial year, maximum research allowance EUR 4.2 million.
Contract research: 70% of the cost of commissioned development work is eligible (Section 3 (4) FZulG): testing institutes, battery labs, university institutes, external simulation providers.
Retroactive: Applications for closed financial years from 2022 are possible as long as the assessment period of the respective year is still open; for 2020 and 2021 it has expired (§ 12 FZulG in conjunction with § 169 AO). Projects started before 1 January 2026 do not receive the overhead allowance.

Which activities in vehicle development are eligible?

The industry does not decide eligibility. The certification office checks every project against three criteria: novelty, technical risk, systematic approach. If one fails, the application fails. Below are the activities we encounter most often at OEMs and suppliers, with the verdict we expect.

Boundary case: eligibility depends on the specific project.

Drivetrain & battery

Novel cell cooling concept with unknown temperature spread across the cell stackEligible
Eligible. Novelty: No cooling concept available on the market holds the required temperature spread for your cell chemistry and charging power. Technical risk: Whether the spread stays below the target and no leakage occurs over the service life is not known before simulation and test module. Systematic approach: Flow simulation, test module, measurement series, iteration, documented by calculation reports and test protocols.
Scaling a proven battery pack design to a new cell chemistryBorderline
Borderline. Routine as long as the thermal and electrical design rules transfer. It becomes eligible when thermal balance or cell balancing demonstrably no longer follow the known rules at the new chemistry and have to be re-derived.
Drivetrain variant for a power class outside the previous performance mapBorderline
Borderline. Eligible is the part for which no validated performance map exists and which is resolved in testing. Not eligible is adapting known power levels within the modular kit.
Adapting a battery pack to a customer installation space within the known scopeNot eligible
Not eligible. Geometry, connectors, cell count: the result is known before the start, the procedure is documented. Effort is not a criterion of the FZulG.

Autonomous driving & driver assistance

Own sensor fusion algorithm for perception under adverse conditionsEligible
Eligible. Anyone who designs a fusion of camera, radar and lidar because standard algorithms are not robust enough in rain, glare or occlusion must explain where the available methods fail. Keep the rejected model variants and their error rates; that is the decisive evidence later.
Path planning or decision algorithm with open behaviour in edge casesEligible
Eligible. Whether a behaviour in an unclear traffic situation can be decided safely and traceably is open beforehand. Test drives and scenario simulations showing the behaviour over iterations are systematic approach and technical risk in one.
Porting an existing ADAS stack to new sensor hardwareBorderline
Borderline. Eligible if the interaction between new sensors and existing software is unresolved and worked out in testing. Routine if manufacturer interfaces and a porting guide prescribe the way.
Parameterisation and calibration of a purchased ADAS system to specificationNot eligible
Not eligible. Intended use of the supplier platform. Only when the platform demonstrably cannot map the requirement and a separate method is developed alongside it does an open technical question exist.

Lightweight design & materials

New joining process for mixed-material construction with open strength and corrosion resistanceEligible
Eligible. Whether the joint between steel, aluminium and fibre composite reaches the required crash and fatigue strength without contact corrosion shortening the service life is not settled before the test series. That makes the technical risk measurable, the strongest starting position an application can have.
Structural component from a new material with open crash and fatigue strengthEligible
Eligible. Whether a new material reaches the required values under crash load and cyclic stress cannot be determined before the test series. The series across wall thickness, microstructure and heat treatment is your evidence of systematic approach.
Optimising an existing forming process for thinner wall thicknessesBorderline
Borderline. Eligible as soon as a target wall thickness is required that the known process demonstrably fails to reach, and the cause is unclear beforehand. Without that measurement the certification office reads only a demanding requirement, and demanding is not a criterion of the FZulG.
Tool or material change with run-in to manufacturer specificationNot eligible
Not eligible. Even elaborate run-in remains commissioning. The way is documented, the result predictable.

Software & the connected vehicle

Central E/E architecture or zone controller with open real-time behaviourEligible
Eligible. Whether a new controller architecture meets the required response times and fail-safety under real load cannot be determined before simulation and prototype. Load profiles and latency measurements across several iterations are the evidence.
Over-the-air update platform with unclear feedback on safety-relevant functionsBorderline
Borderline. Eligible if it is documented that the interaction with safety-relevant software was unresolved beforehand and own verification methods had to be developed. Pure connection of a standard OTA solution is integration.
Integrating a standard infotainment system to specificationNot eligible
Not eligible. Even demanding integration work remains integration. The interfaces are specified, the way documented, the result predictable.

Testing & validation

Test rig trial to resolve a question that was open beforehand, with measurement plan and abort criteriaEligible
Eligible. The clearest case in this group. Whoever defines in advance what is measured and when the trial counts as failed has already documented systematic approach and technical risk before the certification office asks.
First commissioning of a prototype vehicle on the test trackBorderline
Borderline. Eligible is the share in which behaviour not previously mastered is worked out on the real vehicle, documented by change states and measurements. Acceptance to specification is delivery.
Series testing, homologation and release drives to standard procedureNot eligible
Not eligible. Necessary and often laborious work, but no gain of knowledge in the sense of the FZulG. You confirm a result that is technically settled.

What is regularly rejected

Contract development to OEM specification without own solution latitudeNot eligible
Not eligible. The requirement is defined, the solution prescribed by the OEM specification. The exception is a clearly separable part for which no validated design exists. Then we apply for that part, not the order.
Type approval, homologation and technical documentationNot eligible
Not eligible. Mandatory work under road traffic licensing regulations and UN-ECE regulations whose result is settled. The test protocols created along the way can, however, serve as evidence for an eligible development project.
Contract manufacturing and supply without own development riskNot eligible
Not eligible. Whoever manufactures to someone else's drawing bears no technical risk. The case is different when the supplier develops the component itself and is accountable for its behaviour.
Facelift and trim-level variants within the known scopeNot eligible
Not eligible. The result is fixed beforehand: the same functional scope in a new form. Occasionally submitted by advisers along with everything else, and then it drags the whole project into scrutiny.

Your project is not listed or sits between two lines? That is the normal case; eligibility is decided on the specific facts, not on the heading. Describe the project to us and we will tell you where it stands.

What evidence does the BSFZ expect in vehicle development?

Automotive companies practically never introduce an additional system for the research allowance; they have the evidence already. We evaluate what exists and assign each source to the criterion it supports.

What evidence does the BSFZ expect in vehicle development?
Source	What it proves	Criterion
CAD revisions · PDM/PLM	Design revisions show attempt, rejection and new approach, the strongest evidence of experimental development a development department can deliver.	Systematic approach · Technical risk
Test rig and climate chamber protocols	Aborted runs and measurement series from battery and drivetrain test rigs date what was tried when and what it was measured against. A failed run is no blemish; it is proof of an open outcome.	Systematic approach · Technical risk
FEA · CFD · multiphysics simulation	Calculation reports on thermal, flow and crash behaviour with boundary conditions and comparison against measurement show that the target value was not trivially achievable.	Technical risk
Change requests · ECR/ECO	Change histories name the rejected solutions, exactly the information with which the state of the art can be demonstrated.	Novelty
Design reviews · system architecture boards	Minutes record where a solution was uncertain and which assumption had to be tested. Rarely read, often decisive.	Technical risk
Homologation and release protocols	Measurements from testing document the difference between approval to standard procedure and working out previously unknown behaviour.	Scope
Time recording · project hours	For the tax office application the hour counts. We map an existing time recording onto the projects instead of introducing a parallel system.	Cost side
Standard tests · materials and battery testing	Cycle tests, crash and materials tests to UN ECE and ISO document the experimental character when they reflect iterations, not just acceptance.	Systematic approach

The most common mistake in assisted applications is a development process constructed after the fact with phases that never existed at your company. Your real test rigs and change histories are the better evidence; they provide a complete, dated record of the procedure.

What comes out of it?

Two calculated cases for projects that started after 31 December 2025, once at the SME rate of 35%, once at the standard rate of 25%.

Tier-2 supplier, 40 employees · SME

Employer gross, 8 development engineers: EUR 680,000. Eight development engineers on a new battery cooling system, R&D share documented via project hours, plus a testing contract placed with a battery lab

R&D personnel costs (employer gross)EUR 340,000

Contract research, 70 % of EUR 50,000+ EUR 35,000

Overhead flat rate 20 %+ EUR 75,000

Eligible expensesEUR 450,000

Funding rate35 %

Research allowance per yearEUR 157,500

Per year. Applied for retroactively over three open financial years: around EUR 0.4 million, without the overhead allowance, because the project started before 2026.

Tier-1 supplier / OEM development site, 500 employees

Employer gross, 40 developers: EUR 3,800,000. Forty developers working on ADAS software and battery systems, not an SME. Standard rate 25%, contract research with a university institute

R&D personnel costs (employer gross)EUR 2,090,000

Contract research, 70 % of EUR 150,000+ EUR 105,000

Overhead flat rate 20 %+ EUR 439,000

Eligible expensesEUR 2,634,000

Funding rate25 %

Research allowance per yearEUR 658,500

Per year. The assessment base is capped at EUR 12 million, a maximum of EUR 3.0 million allowance at the standard rate, EUR 4.2 million as an SME.

As a rule of thumb: a development engineer with an employer gross of EUR 85,000 who spends half of the time on eligible projects yields around EUR 17,850 research allowance per year (SME rate, with the overhead allowance — the project starts after 31 December 2025). The whole is capped at an assessment base of EUR 12 million and an allowance of EUR 4.2 million per year. Go to the calculator

Guide: R&D tax credit for automotive suppliers and OEMs
The eligibility rules, the sources of evidence and a template for the project description, as a PDF.

What automotive companies ask us most often

Can suppliers apply for FZulG even if OEMs specify the requirements?+

Yes, provided the supplier itself carries out the R&D activity and bears the technical risk. Pure contract development to detailed OEM specification without own solution latitude is problematic. However, once the supplier develops its own solution concepts, eligibility is established, even under framework agreements with OEMs. We draw this line clearly in the application.

Is software development for ADAS and autonomous driving systems eligible?+

Yes, explicitly. Algorithms for perception, decision-making, path planning or vehicle dynamics control are eligible as experimental development under Section 2 FZulG. The software must demonstrate its own technical novelty; mere use of standard libraries without further development does not qualify. The R&D share is cleanly separated from integration and testing.

Can the research allowance be combined with EU funding programmes such as Horizon Europe or IPCEI?+

Combination is generally possible as long as no double-funding of the same expenditure occurs. FZulG and EU project funding can be used in parallel for different cost items or projects. For EU-funded projects with staff cost subsidies, the eligible FZulG expenditure must be reduced accordingly. We coordinate the optimal funding strategy.

Is developing a battery cooling concept such as immersion cooling eligible?+

Yes, if the target thermal behaviour is open beforehand. Cooling that routes a dielectric medium directly past the cells instead of via a cold plate raises an open question of temperature spread, sealing over the service life, and interaction with cell ageing. Resolving these questions with measurement series is the core of the systematic approach the certification office wants to see.

Does functional safety work under ISO 26262 count as an FZulG project?+

The safety case itself, meaning working through the safety lifecycle to the standard, is mandatory work and not eligible. Development is eligible when a new system concept could exhibit a previously unknown failure mode and safeguarding this specific, technically open risk requires own methods, for example new test methods for a novel sensor concept.

Is homologation or type approval eligible?+

No, obtaining type approval under road traffic licensing regulations or UN-ECE regulations is mandatory work with a predictable outcome. However, the technical tests carried out during development, before the actual homologation test, can provide evidence for an eligible development project.

How far back can automotive suppliers apply?+

Applications for closed financial years from 2022 are possible; the assessment period of the respective year is decisive. For many automotive suppliers the largest single amount lies precisely in these earlier years, because several development generations sit there unclaimed. Retroactive application

How much effort arises in our automotive development department?+

For a typical automotive project we reckon with two to four hours on the part of the head of development: a technical conversation in which we take up the project, and one approval round on the finished project description. We take over the evaluation of CAD revisions, test protocols and time recording as well as both applications.

How does your documentation become an application?

Your battery lab and your test field already document everything the certification office wants to see, just in a different language. Here is the same set of facts in four registers, from the test protocol to the application sentence.

In the test field — What gets written anyway

Battery module BM-410, series 2
Spread 5 K at 3C charging
  // target < 3 K, distribution plate not enough

- cell sensors ....... 12 pcs
- channel geometry ... model v3
- series 3 ............ 2.4 K / 1,000 cycles ok

In conversation — What the team says about it

"During fast charging one module always runs hotter than the others. The distribution plate did not do it, so we resimulated the channel geometry and fitted twelve sensors, and on the third run we were below three kelvin."

Technically complete and worthless as application text. There is no reference to the state of the art or to the measured variable.

At the BSFZ — What is actually examined

Novelty
Technical risk
Systematic approach

For each of the three criteria the application must contain a verifiable statement. What is described is the knowledge gained on the way to the finished battery module.

In the application — What we formulate from it

"For direct cell cooling by a circulating dielectric medium no concept existed whose temperature spread at 3C fast charging had been demonstrated below the required target of 3 K. Whether the channel geometry and the distribution of the medium could be designed to hold this spread over 1,000 charging cycles without leakage could not be determined in advance. The project established this in three measurement series against a defined target."

This is the work. The same facts, four formulations, and only one of them is an application. This translation is our actual service: building, from what your test field produces anyway, the statement the certification office can examine. Not writing more beautifully. Writing differently.

Why do applications fail in vehicle development?

Rejected projects from the automotive sector rarely fail on their technology. They fail on five recurring patterns, and we see them in self-submitted applications just as in externally assisted ones.

The state of the art is missing

The application describes what was built, not why it could not be done with what was available. Without named competitor solutions, standards or standard components the certification office cannot establish novelty. This is the most common reason in our own mandates.

How we do it. We specifically name the concepts, components and processes that were examined and rejected, each with the technical property on which they fail.

The OEM order is submitted as the project

Development for an OEM is not excluded per se, but an application covering "the component" forces the certification office to assess contract development and own development together. The routine shares drag the whole project down.

How we do it. We scope the project to the part for which no validated design existed and cleanly separate contract development, acceptance and documentation.

Project risk instead of technical risk

Delivery dates, budget and supply chain are not technical risks. Anyone arguing this way describes a management problem and gets it decided as such.

How we do it. We phrase the risk as an open technical question: which property of the system was not predictable before the start, and exactly where the project would have failed.

The prototype is described as a product

The application reads like a data sheet: range, charging time, latency. The certification office is looking for the way there, the trials that did not work and the measurement that proves the difference.

How we do it. We derive the systematic approach from your own artefacts: layout in the calculation report, trial in the test protocol, decision in the change request.

Cost side and facts do not match

The BSFZ certifies the project, the tax office checks the costs. Anyone who claims material costs for the prototype, or hours that contradict the project description, loses in the second step, after the certificate has already been issued.

How we do it. We run project description, time recording and research allowance application (ELSTER) against the same scope from the start. The cost side is not created afterwards.

If you already have a rejection, the first step is analysing the decision: which of the five points carries it. That determines whether objection or new application is the right way.

Which other industries use the research allowance?

The sector never decides eligibility — Section 2 FZulG does. These pages show the same three criteria against the activities of each field.

Mechanical engineering — Design, testing, commissioning
Medical technology — Operating principle, SaMD, pre-approval
Pharma & life sciences — Compound, formulation, bioprocess
Construction — Methods, materials, component tests
Energy & cleantech — Cell, storage, grid control
Aerospace — Structure, propulsion, avionics
Agriculture & FoodTech — Process, formulation, field trial
Software & IT — Algorithm, model, architecture

Send us a test protocol, not a questionnaire

In the first consultation we talk about your development, not about your legal form. After thirty minutes you know which part of your development is eligible, in what order of magnitude, and whether a retroactive application is worthwhile. The first consultation is free; 30 % of the fee falls due with the BSFZ decision, 70 % only after the allowance has been paid out.

Book a first consultation

Official sources

Read on

Max Nodes

Founder and Managing Director of NOVARIS Consulting. Specialised in the German R&D tax credit (FZulG) since 2021; 25 of 25 accompanied BSFZ applications approved (as of 09/2026). Max Nodes

R&D tax credit for automotive: from the battery to the driving function

Automotive: manage battery temperature