Electric cars VAT exemption plan

There’s currently a wide effort to involve electric car incentives in recovery plans around the world and in Europe, it might actually work.

In the US, Democrats have been trying to include electric vehicles and renewable energy as part of the economic recovery packages, but they haven’t had much success. There are similar efforts in Europe that appear more likely to go through. The European Union is considering to help automakers with a stimulus package that would boost electric vehicle sales – leaving diesel and gasoline vehicles behind.

EU executive is considering incentives for carmakers to produce and sell clean cars and investment in charging infrastructure for electric vehicles, according to a draft EU document seen by Bloomberg news.

“Massive support for the automotive industry will put the significant debt on future generations,” the commission said in the document. “That support must respect the expectations of our youth on climate change and for a healthier and cleaner future.”

Zero-emission cars would be exempted from Value Added Tax.

The initiative would take several forms, including a potential EU-wide VAT exemption on electric cars.

The plan mirrors earlier comments made by Bruno Le Maire, France’s Minister of Economy and Finance when talking about helping automakers struggling due to the pandemic. Le Maire said (translated from French):

“We are ready to support the demand for vehicles but it will be support for clean vehicles that emit less CO2, especially electric vehicles.”
France already has incentives for electric vehicle sales and the government official didn’t elaborate on what new incentives could be put in place.

The European Union has also put goals in place to reduce emissions in new vehicle sales. Automakers have to produce and sell more electric cars as part of their lineup in order to comply with the government standards or they are subject to fines. Some automakers have admitted not being ready to deliver enough electric vehicles to comply with the EU’s new requirements.