Slovakia is essentially a global superpower in the per-capita production of cars, producing more new cars per capita than any other country in the world. According to statistical data from 2018, four global car manufacturers located in Slovakia – Volkswagen Slovakia, Kia Motors Slovakia, PSA Group Slovakia, and Jaguar Land Rover – produced more than a million cars. The Slovak Automotive Industry Association reports that over 1.08 million cars were manufactured in Slovakia in 2018. It will be interesting to see whether this number will be surpassed given the recent challenges and potential slowdown in the automotive industry.
Some of these car manufacturers have already started to produce electric vehicles in Slovakia, and based on recent trends and the global transition to greener and smarter transportation, it will be exciting to see how large the share of electric vehicles manufactured will compare to that of combustion engines this year.
The current situation in e-mobility markets in Western European countries shows that supporting e-mobility through fiscal or non-fiscal state incentives seems to be the right approach. Based on studies by the European Automobile Manufacturers’ Association, the share of electric vehicles on the market is almost zero in countries where incentive schemes and support from the state are very small.
Slovakia would also like to keep pace with Western European economies, so at the beginning of 2019 it finally made a significant stride in supporting electro-mobility as a new trend in the automotive industry. In March 2019, the Slovak Government adopted its Action Plan to Develop E-Mobility, which contains 15 specific measures to develop the e-mobility market. The measures should be implemented within two years and should motivate the wider public to use e-vehicles. With it, the government aims to have between 35,000 and 50,000 registered e-vehicles by 2030.
The most important measures in the Action Plan include the incentives provided to encourage the purchase of e-vehicles, the incentives to encourage the development of the e-charging infrastructure, a simplified process for constructing charging stations, tax write-offs of e-vehicles in two years instead of four years, the possibility for e-vehicles to drive in bus lanes, and charging stations in public parking spaces.
Probably the most attractive measure is a financial subsidy for those who purchase an e-vehicle. On November 18, 2019, the Slovak Ministry of the Economy announced a call for the submission of subsidy requests to purchase e-vehicles, including plugin hybrids. Initially, the allocated subsidy amounted to EUR 5 million, although it was later increased to EUR 6 million. Anyone, including public institutions, can ask for this subsidy, but it is limited to EUR 8,000 per e-vehicle and EUR 5,000 per plugin hybrid. On December 16, 2019, when the registration process started via dedicated portal, the entire EUR 6 million was allocated within four minutes.
The Ministry of the Economy also announced a call for subsidy requests for the construction of public charging stations. The allocated amount of EUR 1 million is dedicated to municipalities and regional self-governments, including their organizations, with EUR 2,500–5,000 to be allocated per charging station. Five percent of the overall costs must be borne by the municipalities, and the remaining 95% will be paid from the state budget. The deadline for submitting subsidy requests was October 1.
In November 2019, the Slovak parliament approved important legislative amendments which will come into effect at the start of 2020 to help further implement the measures adopted by the Action Plan. These include the amendment to the Act on Income Tax allowing tax write-offs of e-vehicles in two years instead of four years, and the amendment to the Act on Road Transportation introducing a special green licence plate for e-vehicles which will allow them to enter specially created zero-emission zones in the cities and use bus lanes.
Many other important legislative changes are still to be implemented. These include an amendment to the Building Act that allows simplified administrative proceedings to obtain a building permit for a charging station. In addition, there is the possibility of reducing tariffs for electricity used to charge e-vehicles, which would make the use of e-vehicles even more attractive, although the Regulatory Office for Network Industries has so far been unsuccessful in implementing such reductions.
Overall, the measures introduced and already implemented by the Action Plan seem to be the right approach to develop e-mobility in Slovakia, and it is hoped that future governments will be even more supportive in this field.
By Michal Hutan, Partner, CMS Bratislava