EU Plans To Exempt Electric Vehicles From VAT

- May 21, 2020-

 EU Plans to Exempt Electric Vehicles from VAT 


Electric vehicles will become part of the EU ’s green economic recovery plan. On May 20, the EU introduced a package of plans to promote electrification of the automotive industry.


Specific policy aspects mainly include the following aspects:


1. The EU is considering granting subsidies to new energy vehicle manufacturers and increasing the intensity of charging facilities.


2. Zero-emission vehicles will be exempt from VAT.


3. Provide loan support for the purchase of clean vehicles within the EU, with a total of 20 billion euros in the next two years, bringing the overall carbon emissions to EU standards.


4. Set up an energy-saving power fund totaling 40-60 billion euros to accelerate investment in zero-emission power trains.


5. Consider doubling the investment in charging facilities and build 2 million charging piles and fuel supply stations by 2025.


VAT exemption is a direct way to stimulate demand after the epidemic affects the consumption of new energy vehicles. At present, only a few countries such as Norway in the EU are exempt from VAT, while mainstream countries such as Germany, France, Britain, Sweden, etc. are only exempt from purchase tax, etc., and still charge about 20% VAT. If the reduction is 20%, take the mainstream price of 30,000 euros as an example, the value-added tax is exempted from 0.5 million, and the government subsidy is 0.3-0.6 million euros. A series of concessions, the economy is prominent, will greatly stimulate consumer demand, taking Norway's electrification rate as high as 50% + as a reference, EU countries electrify

According to the data of brokers, the European lows should resume production, the industry lows should have passed, and sales will pick up speed. In April, mainstream countries sold 25,000 vehicles, -64% month-on-month, but the electrification rate continued to rise to 13%; sales in May gradually recovered, Q2 sales are expected to reach 100,000, and new models such as Q3-Q4 Volkswagen MEBs are on schedule Launched, it is expected to recover to 25-35 million in a single quarter. Annual sales in Europe are expected to be 800,000 to 850,000, an increase of more than 50% year-on-year. The assessment of carbon emissions will become more stringent in 2021, and it is expected that 1.5 million + electric vehicles will still be required to meet the requirements and increase growth.