Published on January 3rd, 2019 | by Steve Hanley0
EV Subsidies Going Up In Italy, Down In China
January 3rd, 2019 by Steve Hanley
EV subsidies are a hot topic these days, what with Tesla and GM passing the 200,000 EV sales mark in the US in the past few months and Norway setting a new EV sales record with 30% of all new cars sold in 2018 being battery electrics thanks to aggressive incentives. As the US considers whether to cancel or expand its electric car subsidies, other countries are having the same discussion.
Italy Unveils New EV Subsidies
The Italian legislature this week established a new set of regulations aimed at accelerating the adoption of electric cars. According to Electrive, the new regulations, once approved by the lower house, will take effect March 1. They will provide buyers who purchase a battery electric or plug-in hybrid vehicle costing less than €50,000 with a subsidy of up to €6,000. Few details about the program are available at this time.
The other side of the coin is a new tax on vehicles with gasoline or diesel engines, based on emissions. A vehicle that emits 161 to 175 grams of carbon dioxide per kilometer will pay a tax of €1,000. The more emissions, the higher the tax. A vehicle that emits 201 to 250 grams of carbon dioxide per kilometer will pay the highest tax — €2,000.
There are exemptions for small family cars, but larger sedans and SUVs will be subject to the maximum tax rate. The new policies are intended to remain in effect through the end of 2021.
China Scales Back Some EV Incentives
Now that the new year has arrived, China’s new EV credit system is in full force and effect. That program requires 10% of all new car sales to be “new energy vehicles.” Any manufacturer who misses the target will have to purchase credits from another manufacturer who has a surplus. The details of the program are complex. Battery electric cars receive more credits than plug-in hybrids, which receive more credits than conventional hybrids. The required percentage will ratchet up to 12% next year and again every year thereafter.
With the new scheme in place, China has announced that it will scale back subsidies for electric vehicles with a range of less than 300 km. The existing subsidy will be slashed by 30% in 2019 and end completely in 2020. However, midsize and large EVs with a range of 400 km or more will get a 10% increase in the subsidies applicable to them.
China has invested a lot of money in EV subsidies and is looking to trim its expenses. Sources say further cuts to incentive programs may be in the offing, once the government gets some feedback on how the new EV mandate works in practice.
It is too soon to speculate on how the new program will effect Tesla, which is building a new factory in Shanghai. It, of course, only manufactures battery electric cars, so the company should have a large supply of credits to sell once the factory is completed and starts producing new cars.
In the US, meanwhile, powerful forces from President Tantrum to fossil fuel companies are lining up to support the elimination of the federal tax credit. When it comes to charting EV incentives worldwide, it’s fair to say national policies are all over the map.