Overview of New Energy Vehicle Policies in Major Global Countries in 2023

The subsidy for purchasing new energy vehicles in China has expired on December 31, 2022. After several delays, this national fiscal subsidy policy implemented since 2010 has finally completed its historical mission.

For over a decade, the national financial subsidy policy has made great contributions to the development of the new energy vehicle industry, but currently the role of the “national subsidy” has been significantly reduced, with most vehicle subsidies accounting for less than 10%.

At the same time, the sales of new energy vehicles in China are growing at a high speed. The Market penetration in 2022 will be 27.6%, achieving the goal of 25% penetration of new energy vehicles three years ahead of schedule.

The withdrawal of national subsidies to a certain extent means that the Chinese new energy vehicle consumption market is gradually maturing under policy promotion, and the new energy vehicle industry will also enter a more pure market competition. Alternative fuel vehicle enterprises should not only continue to solve the inherent shortcomings such as endurance, energy supplement and residual value, but also make greater efforts in quality, service and other links.

McKinsey’s latest survey report on Chinese automotive consumers summarizes several major consumption trends and characteristics: consumption upgrading remains mainstream, and the proportion of rational customers is expanding; The halo of foreign investment is gradually fading; Consumers are more concerned about the performance of cars themselves, and the growth of electric vehicles in China is gradually shifting from being driven by policies and license plates to being driven by consumers’ real needs.

At the same time, other countries around the world have also provided subsidies and tax reduction policies for new energy vehicles, hoping to transform their own country’s consumption trend of new energy vehicles from policy driven to demand driven. In 2022, some countries completed this transformation by reducing or stopping subsidies for new energy vehicles, allowing new energy vehicles to enter a stage of direct confrontation with fuel vehicles; Some countries are catching up with the development of new energy vehicles and promoting the penetration of new energy vehicles through stronger subsidy policies. So what changes will be made to the subsidy policies of other countries in 2023?

United States

In August 2022, under the Inflation Reduction Act (IRA) signed by US President Biden, subsidies will be provided for consumers to purchase electric vehicles assembled in the United States after January 1, 2023.

There are two localized requirements for obtaining tax credits for electric vehicles: firstly, the key metal raw materials included in electric vehicle power battery factories are extracted and processed in the United States or in any country with which the United States has signed a valid free trade agreement; Alternatively, if the recycling ratio reaches at least 40% by January 1, 2024, a tax credit of $3750 can be obtained.

Secondly, the localization value percentage of new energy vehicle power batteries manufactured and assembled in North America is over 50%, which can receive another tax credit of $3750. This policy will last for 10 years, from December 31, 2022 to December 31, 2032.

The United States also provides a tax credit of up to $4000 for used electric vehicles, and electric vehicles for rental purposes can also receive a tax credit of up to $7500 per vehicle.

The policy also proposes a new upper limit on the retail prices of eligible vehicles. The price of cars is not more than 55000 dollars, and that of trucks, SUV, pickups and other models is not more than 80000 dollars.

At the same time, the United States has also imposed income restrictions on buyers, with a maximum income limit of $150000 per year (or $300000 per couple) for single individuals who purchase new electric vehicles, and $75000 per year (or $150000 per couple) for single individuals who purchase second-hand electric vehicles.

Canada

In March 2022, the Canadian federal government announced a subsidy policy for zero carbon vehicles, whereby electric vehicle models priced below $45000 can enjoy a subsidy of $5000. In addition to direct incentives for electric vehicles, the relevant budget also includes other measures, such as investing in charging infrastructure.

In December 2022, the Canadian government announced the full electrification plan of cars. According to the new regulations, one fifth of the passenger cars sold in Canada in 2026 will need to be electric cars, which will increase to 60% by 2030, and 100% of the passenger cars sold in Canada will need to be electric by 2035.

At the same time, the Canadian federal government proposes to track sales by issuing car sales credits. Compared to plug-in hybrid vehicles, all electric vehicles and pickup trucks have higher credit scores.

Germany

The German government plans to lower the subsidy for pure electric vehicles in various price ranges starting from 2023: the subsidy for pure electric vehicles of 40000 euros and below will be reduced from 6000 euros to 4500 euros, and the subsidy for pure electric vehicles priced between 40000 and 65000 euros will be reduced from 5000 euros to 3000 euros; Vehicles above 65000 euros are not eligible for subsidies. Meanwhile, plug-in hybrid models will no longer enjoy subsidies. In 2024, battery subsidies priced at 40000 euros or less will continue to be lowered to 3000 euros.

For second-hand vehicles with a service life of no more than 12 months, a total mileage of no more than 15000 kilometers, and no subsidies from other EU countries, pure electric vehicles can earn 5000 euros, and hybrid vehicles can earn 3750 euros.

The implementation of Germany’s new energy subsidy policy is similar to that of China, and the cost of subsidies will still be shared by the government and car companies. Car companies pay in advance, consumers pay subsidies for the vehicle price, and after the vehicle is registered and reaches the prescribed mileage, the state allocates subsidies to car companies.

France

In October 2022, French President Makron announced at the Paris Motor Show that for models with a price lower than 47000 euros, personal subsidies would increase from 6000 euros to 7000 euros, and corporate subsidies would increase from 4000 euros to 5000 euros.

For every pure electric or hydrogen powered vehicle purchased by a company at a price below 45000 euros, a subsidy of 4000 euros can be obtained; For cars valued between 45000 and 60000 euros, the subsidy will be reduced to 2000 euros; Cars exceeding 60000 euros are not subsidized. Enterprises who purchase a plug-in hybrid vehicle can receive a subsidy of 1000 euros.

France will launch an electric vehicle rental subsidy program, which will lower the monthly rent of electric vehicles to 100 euros (approximately 685 yuan), which is lower than the cost of gasoline for many traditional fuel car users.

Norway

Norway, as the country with the highest penetration rate of Alternative fuel vehicle in Europe, has encouraged electric vehicles since 1991, but its support means are mainly reflected in taxes and use costs, such as exemption of sales tax and 25% value-added tax, road insurance tax, charging fee, parking fee, import tariff, etc. But with the significant increase in the proportion of new energy vehicles (reaching 87.6% in December), Norway’s preferential policies have begun to tighten.

Starting from 2023, Norway introduced two new taxes applicable to pure electric vehicles for the first time. The first item is the weight tax of 12.5 Norwegian krone per kilogram of vehicles above 500 kilograms. The second item is that 25% VAT will be levied on the price of pure electric vehicles exceeding 500000 Norwegian krone (about 47000 euros). Most of the top 10 best-selling BEVs in Norway are priced above this threshold.

Sweden

The Government of Sweden announced that from November 8, 2022, the government will no longer provide incentives for new energy vehicles (including pure electric vehicles and plug-in hybrid vehicles), but there is still no need to pay road tax. The reason is that the cost of buying and driving such cars is comparable to the cost of gasoline or diesel cars. In fact, the Government of Sweden may not be able to afford high subsidies.

For pure electric vehicles ordered before this date, a subsidy of up to 50000 Swedish krona (about 4600 euros) will be paid from January 1, 2023, and a subsidy of up to 10000 Swedish krona will be paid for Plug-in hybrid. In 2023, the Government of Sweden’s new energy subsidy budget will be 2.99 billion Swedish krona, mainly used to pay for subsidies for car purchases before November 7. In 2024, this budget will be reduced to 20 million Swedish krona.

At the same time, the Government of Sweden added 1.61 billion Swedish krona and 1.12 billion Swedish krona of charging infrastructure construction subsidies in 2024 and 2025, respectively. In 2023, Sweden will provide Klimatlive (Climate Life Plan) with 400 million Swedish krona to invest in charging infrastructure, and the budget of this project will reach 500 million Swedish krona in 2024 and 2025 respectively.

Britain

According to the research of Direct Line, a British insurance company, on the British car market, the average lifetime ownership cost of electric vehicles is now lower than that of fuel vehicles due to the high price of gasoline and the rise of second-hand value of Alternative fuel vehicle and other factors.

On June 14, 2022, the UK announced the cancellation of a £ 1500 subsidy for pure or plug-in hybrid vehicles. Previously, the UK had gradually reduced its subsidies. From £ 2500 to £ 1500, the maximum selling price for subsidized models has also decreased from £ 35000 to £ 32000.

The UK has shifted its existing subsidy funding towards infrastructure construction such as charging networks and the electrification transformation of other types of vehicle models, including taxis, motorcycles, trucks, wheelchairs, and other vehicles that are still eligible for subsidies (subject to certain conditions).

Netherlands

On January 6, 2023, the Dutch government announced that there will be a total subsidy of 99.4 million euros in 2023, of which 67 million euros will be used to purchase or lease new cars and 32.4 million euros will be used to purchase old cars. The spokesperson said, ‘Subsidies can be applied for nearly 23000 new cars and over 16000 used cars.’ Although the total subsidy amount is higher than last year, the average amount per car has decreased.

The subsidized car must be fully electric, and the new car price must be between 12000 and 45000 euros. Anyone who purchases or leases a new car is expected to receive a subsidy of 2950 euros, much lower than the 4000 euros in 2000. In 2024, the subsidy amount for new cars will be further reduced to 2550 euros. The subsidy for second-hand electric vehicles has been maintained at 2000 euros since the implementation of the policy.

Italy

In order to promote the development of electric vehicles, the Italian government has increased subsidies for individuals with incomes below 30000 euros to 4500/3000 euros starting from 2023; For scrapped vehicles and those with incomes exceeding 30000 euros, purchasing pure electric/plug-in hybrid vehicles will receive subsidies of 5000/4000 euros respectively.

Spain

According to the Moves III car exchange subsidy program in Spain, if an old car with a service life of more than 10 years is replaced and a brand new pure electric or hybrid vehicle is purchased and registered before the end of 2022, the government will refund a subsidy of up to 7000 euros in the next 1 to 3 years; Even if only a new car is purchased, buyers may receive a subsidy of approximately 5000 euros. In addition, car companies also provide free home Charging station and installation services, worth about 2000 euros.

Japan

In order to increase the market share of electric vehicles, the Japanese government increased subsidies for purchasing pure electric vehicles and plug-in hybrid vehicles in 2022, with a maximum of 2 times and 2.5 times the original amount, respectively. The maximum subsidy for pure electric vehicles can reach 800000 yen (approximately 40000 yuan).

The subsidy for new energy vehicles will be extended until the end of 2023, and the tax reduction measures for environmentally friendly vehicles that offer discounts on fuel efficient models will also be extended from the end of April 2023 until the end of 2023.

The “environmental performance discount” paid when purchasing a car will be extended from the end of March 2023 to the end of the same year. In order to popularize pure electric vehicles, the preferential measures of twice exemption from vehicle weight tax levied during purchase and inspection will be maintained until the end of April 2026.

Korea

In January 2023, South Korea introduced a new subsidy policy for new energy vehicles, shifting from emphasizing performance and range in the past to focusing more on maintenance, safety, and charging infrastructure.

The maximum national subsidy amount will decrease from the current 7 million won (approximately 37000 yuan) to 6.8 million won. The threshold for enjoying a 100% subsidy has been adjusted from less than 55 million won in the past to 57 million won.

The new subsidy standards also include limiting the total fuel efficiency subsidy and mileage subsidy to 5 million Korean won, a decrease of 1 million Korean won compared to now. Subsidies will also be provided based on whether to operate user service centers, after-sales service centers, and parts management centers. If not, only half of the fuel efficiency and mileage subsidies can be obtained.

The new subsidy standard also includes a plan to provide an additional 150000 Korean won subsidy for electric vehicles, provided that the electric vehicles adopt “V2L (vehicle to load)” technology.

In addition, the new subsidy standard also includes a plan to pay an additional 150000 Korean won as a subsidy to electric vehicles of car manufacturers who have installed more than 100 fast charging piles in the past three years.

According to the new subsidy standards, the subsidy for domestic electric vehicles in South Korea is at least 2.5 million Korean won more than that for imported electric vehicles, which may make users more willing to purchase pure electric vehicles produced in South Korea.

Thailand

The Thai government has exempted import taxes on electric vehicles. If a complete vehicle factory plans to land in Thailand for production within three years, the government will provide an additional subsidy of 70000-15000 Thai baht (approximately 13900-29800 RMB) per vehicle, with the specific subsidy amount depending on the vehicle model.

Compared with the consumption tax rate of 8% for traditional vehicles, Alternative fuel vehicle can enjoy a preferential tax rate of 2%. From 2022 to 2023, Alternative fuel vehicle imported into Thailand can enjoy a maximum of 60% discount on import tax. At the same time, the import of key components of Alternative fuel vehicle such as batteries can enjoy the preferential policy of exemption from import tax.

Indonesia

In December 2022, Indonesian Minister of Industry Agus Gumiwang stated that the government plans to provide subsidies of up to INR 80 million (approximately USD 5130) per electric vehicle. Each electric hybrid vehicle will receive a subsidy of approximately 40 million rupees, each electric motorcycle will receive approximately 8 million rupees, and each motorcycle converted to an electric motorcycle will receive a subsidy of 5 million rupees.

The subsidy from the Indonesian government aims to triple the sales of local electric vehicles by 2030, while introducing electric vehicle manufacturers to invest in the local area, achieving the vision of establishing a local end-to-end electric vehicle supply chain.

Malaysia

The Malaysian government has introduced tax reduction measures for electric vehicles, announcing a 100% exemption from import and consumption taxes on electric vehicles, as well as exemption from road tax on electric vehicle imports (CBU) by December 31, 2023. For the assembly of imported electric vehicles (CKDs), 100% sales tax will also be exempted before December 31, 2025.