Estonia's electric vehicle purchase support scheme proves contentious
Starting Monday, February 27, interested parties can once again apply for support for the purchase of an electric vehicle (EV), as the state is distributing a total of €8.5 million in grants toward the purchase of 1,700 EVs. Economic expert Kaspar Oja says that with this scheme, the state is supporting people with high incomes who don't actually need this support.
Eligible for support from the Environmental Investment Center (KIK) are purchases of fully electric vehicles and cargo bikes made on or after February 6. Compared with previous support rounds, private individuals will receive €5,000 and businesses €4,000 in ex post support, i.e. after KIK has received proof of the acquisition or leasing of the vehicle.
"There is enough support funding for approximately 1,700 vehicles and 700 cargo bikes," KIK project coordinator Lauri-Indrek Tummeleht explained. "A car's price cannot exceed €60,000 plus VAT nor an electric truck's [price] €80,000 plus VAT. Based on already submitted applications, it can be said that completely different, ordinary people and businesses are applying for this support."
The tab for the combined €8.5 million in support for the purchase of these 1,700 vehicles, however, is being picked up by all Estonian taxpayers.
Some 40 percent of EVs sold last year were premium German brands — Audis, Mercedes-Benzes, Porsches and BMWs. Prices among these cars can exceed even €100,000.
"Such support tends to favor people with bigger incomes, who can likely manage the green transition on their own," said Oja, an economist at the Bank of Estonia.
"And if you look at online forums where the buying of these cars is being discussed, then they tend to be talking about how many more upgrades they can get on the car, not necessarily whether to buy this car or not," he continued. "For the majority of society, for whom EVs are already not currently affordable, and for whom they aren't affordable together with this support either, they won't be able to manage this green transition so easily."
EV enthusiast and Estonian EV Facebook group administrator Martin Rinne said that as the most recent round of the EV purchase support measure took place in 2020, these grants haven't impacted car purchases in subsequent years.
"Why I don't like this EV support — I don't find supporting the purchase of things to be morally right," Rinne said. "About as many new EVs arrived in Estonia this January as in all of 2019 combined. With such growth, it's very difficult to say whether the measure will have an impact or not, as cars bought this January didn't fall under this measure, but the growth is there."
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Editor: Aili Vahtla