Which Countries Have the Best Incentives for EV Purchases?

 In Electric Cars, EV Industry


As of the end of 2016, two million electric vehicles (EVs) had hit the roads globally, or according to the IEA 0.2% of all passenger cars. Auto manufacturers have invested substantial capital into EV technology, betting EVs are the future of the transportation. Tesla, the leading manufacturer of EVs, have showcased to the world the potential of EVs. The introduction of the Model 3, and other manufacturers releases at competitive price points, EVs are set to disrupt the global market.

One significant advantage of EVs are zero emissions during operation, Increased pressure to limit the global carbon footprint, EVs have become a personal favorite of policymakers. governments around the world are creating an environment through financial incentives to attract new EV customers.

Policy Support for Electric Vehicles

Norway, has one of the most impressive EV targets, planning to completely ban the sale of petrol cars by 2025, and 37% of new vehicle sales are currently EVs. In Norway, electric cars are exempt from acquisition tax, representing around NOK 100 000 (USD 11 600), furthermore, they are exempt from the 25% value-added tax (VAT) on car purchases. This, coupled with a large number of waivers on fees such as road tolls and ferries, continues to provide a favorable environment for electric car uptake.

In Iceland, electric vehicles are exempt from all import duties on car purchases, which are customs 0-65%, depending on CO2 emission level, and 24% value-added tax (VAT). With these generous incentives, BEVs and PHEVs accounted for 11.7% of total new car registrations in 2017. Iceland sometimes gets overlooked, probably because of its small size, but the country is actually at second place behind Norway.

In China, policies continue to provide strong financial and non-financial incentives to EV adoption. Exemptions from purchases and additional taxes ranged between CNY 35 000 and CNY 60 000 (USD 5 000 to USD 8 500). Local and regional authorities can complement these within the limit of 50% of the central subsidies. As of June 2016, EV sales have increased a staggering 162% compared to the same period the previous year. The combination of policies is encouraging consumers to buy electric cars at a financially comparable price tag.

In Japan, a new subsidy scheme was introduced in 2016 that grants gradually higher subsidies as the battery range increases, with the maximum subsidy set at JPY 850 000 (USD 7 700). For example, a Nissan Leaf with a 30-kWh battery, the purchase incentive amounts to JPY 330 000 (USD 3 000).

The United States federal government and a number of states offer financial incentives, including tax credits, for lowering the upfront costs of plug-in electric vehicles. Federal Internal Revenue Service (IRS) tax credit is for $2,500 to $7,500 per new EV purchased for use in the U.S. The size of the tax credit depends on the size of the vehicle and its battery capacity, for example, the best-selling EV in 2016, Tesla Model S would be applicable to the full $7,500 subsidy. At a state level, Colorado is by far the most attractive, offering an additional tax credit of $5,000, and with the federal subsidy, you can get a maximum of $12,500 off the sticker price of an EV.

The United Kingdom will offer up to 35% of the purchase price of an EV, or up to a maximum of £4,500, and have recently announced that this will be extended until March 2018. In addition, a grant of £500 is available to contribute towards the cost of home charging installation.

In Canada, the Government of Ontario offers a subsidy of up to $14,000 off the purchase price of an EV and up to $1,000 of the price of a home charging station and a green license plate. The Government of Quebec offers a rebate of up to $8,000 and 50% of the cost of a home charging station, or up to a maximum of $600. The government of British Columbia offers a rebate of up to $5,000 of the price of an EV.

The incentives for EVs in Canada have been predominantly at a province level, however, this is likely to change, unlike the United States, Canada has adopted the federal incentive for EVs, however, Marc Garneau, The Minister for Transport recognizes the public’s concerns and has this to say:

“We understand Canadians’ concerns about the environment and are developing an aggressive strategy to tackle climate change” and went on to say, “we are investing in the future of cleaner transportation for all Canadians”

Nothing concrete is yet to appear; however, all the signs suggest Canada is set to launch federal incentives to attract consumers towards EVs.

Concluding Remarks

It is clear that the evolution of EV incentives will continue to support EV adoption, while technological innovations will allow EVs to become increasingly more competitive with internal combustion vehicles. It is difficult to argue that Norway’s aggressive strategy, makes it the global leader in EV adoption. Nearly a third of new cars sold in Norway are electric, the highest proportion worldwide, followed by 11.7% in Iceland, 6.4% in the Netherlands, and 3.4% in Sweden. The key to the success of EVs is not just policy support, although it plays a major role. For countries looking to become a prominent player in EVs, it will take a combination of policy incentives, support from the automotive industry and a user-friendly infrastructure. Whether for business or personal use, it is probably the best time to purchase an EV if you want an incentive. As EV popularity increases, the need for government incentives is likely to decrease.

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