When the first aid for the purchase of electric vehicles was put in place, their sales were residual. Now, that they are beginning to gain volume, it is time to rethink aid and that its purpose is to help those who really need it.
For some time now, aid for the purchase on account from the public sector has been a way of reducing the barriers to acquiring electric vehicles. As long as price parity is not reached, there is an additional technological cost associated with one of the most expensive components, the batteries.
As things are going in the main world markets, which are China, the United States, and the European Union, purchase aid continues to be an important stimulus for the acquisition of electric vehicles. Its withdrawal early can stifle demand, but if it is done too late it incurs budgetary problems.
The crux of the matter is when is the right time to end the aid and for the market to work on its own. Not only that, it is also a strategic question, outlining the aid correctly can prevent deindustrialization and the market from growing based on imports while factories close.
The European Union does not have a unified policy to give aid to electric cars, each country does it in its own way and with the criteria it deems appropriate. In Germany, the aid has been so generous that it has stimulated a picaresque buying-selling with benefits from which third countries have benefited where used cars have been purchased.
In another case, Spain, the aid -Plan MOVES III- is no longer sufficient due to an issue of amount, because it is aid that is received a posteriori and taxed after having received it. The adoption of electric cars in Spain is behind what a country of our size and macroeconomic scale should be.
In the United States, after the entry into force of the Inflation Reduction Act (IRA), the aid of up to $7,500 is outlined around electric vehicles that are of high local content, to the detriment of imports, therefore that more than one manufacturer has rethought that of manufacturing within the country itself so as not to lose market share.
If we look at China, they started giving an acquisition tax exemption for New Energy Vehicles (NEVs), which includes electric and plug-in hybrids, in 2014. They extended to 2017, then to 2020, then to 2023, and now we know that It will be until 2027. It will be a progressive reduction of the amount instead of a sudden.
Analyzing the different policies and the particularities of each place, we verify that aid is more effective when it is not a broad brush, but rather when it has a more precise application, where it does a greater good for society as a whole. For example, it doesn't make sense to subsidize overpriced electric cars, but it does make sense to subsidize buses, vans, or trucks.
On the other hand, the aid does not have to go against the general interest of the industry, especially if it is an important productive sector. In the US they have been clear if someone has to benefit, it will be producers in North America, neither Japanese, Chinese, Korean, nor European. Otherwise, manufacturers do what is best for them.
If it is necessary to continue subsidizing purchases for a few more years, until the long-awaited price parity between electric and thermal is reached, it will be necessary to continue spinning fine lines. Those who do not really need it should not receive the aid, since there is a loss of tax revenue. Norway has already given clues as to what can happen.
It is necessary to take into account the income of the applicant for the aid, as well as the amount of the vehicle that he wants to acquire. For example, a 400 hp electric car does not satisfy a need, it is a whim. And for what is in the middle ground, that the help to perceive is less than who really needs said help.
As the inflation problems of the post-pandemic years subside, manufacturers will recover the desire to compete more among themselves and adjust prices, a necessary step for the authentic massification of technology. And, as we saw yesterday, it will also have to be assumed that more basic vehicles can be used for the most basic needs, not everything has to be Premium.
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