Tax exemptions and free parking may drive more EVs in the Philippines after new electric car bill turns into a law.
Just a month after the Electric Vehicle Industry Development Act (EVIDA) in the Philippines lapsed into law last April 15, several importers have ordered and a few have brought in small Chinese electric cars to the country just to test the market. As this was going on, Nissan launched the Kicks and Toyota declared itself lord of the EV market with its 95% market share using its hybrid vehicles.
Philippine laws appropriate taxes from vehicle owners, ranging from road use to purchase value, and impose high duties for vehicles imported from non-ASEAN countries. Though trade agreements with China are in existence, these do not cover entirely the import duties of vehicles. The laws were designed to protect a now limited car manufacturing industry in the country.
Under EVIDA however, imported EVs will be entitled to tax incentives under another law, the Tax Reform for Acceleration and Inclusion (TRAIN), which updates and upgrades the current tax system to be more responsive to the financial and economic realities of a quickly digitalizing economy. Under the law, imported hybrids get 50% off from applicable excise taxes. Battery EVs get full tax exemptions.
The law has encouraged car companies to offer more hybrid vehicles. Based on the recent official figures from the Chamber of Automotive Manufacturers of the Philippines (CAMPI), as of end of June 2022, there are already 1,013 total xEVs sold in the market, surpassing the 2021 total volume of 843 and 2020’s 378. A total of 962 of the 2022 year-to-date sales are Toyota and Lexus models.
Collectively, Toyota now owns a 95% share of the electrified vehicle market with its hybrid EVs like the Prius, Prius C, and Corolla Altis Hybrid, while the remaining 5% is divided among BYD, Hyundai, Mitsubishi, and Nissan and a spattering on yet-to-be-known Chinese brands. There is also a sprinkling of local EV brands and usually these companies manufacture 3-wheel electric passenger and electric transporters. These small companies will greatly benefit from the law. In the past 10 years, nearly 15,000 EVs and hybrids have been sold in the country, yet very few of these are cars, as most of them are electric tricycles and small buses for last mile public transportation.
“With EVIDA, the Philippines is now in a stronger position to further attract hi-tech investments and create high-value jobs in the country by taking advantage of the ongoing global shift to EVs through strong national policy support,” former Department of Trade and Industry Sec. Ramon Lopez said, just before turning over his department to the new leadership under the Ferdinand Marcos, Jr. administration.
The lapsing of the bill into the EVIDA law came at a no better time. In early May, fuel prices hit their highest prices yet, reaching up to P90 ($1.70) per liter. Averaging about P75 ($1.35) for gasoline and P78 ($1.40) per liter until late July, the prices are steadying to about P62 ($1.15) per liter.
EVIDA was also designed to create a new industry that will generate more employment if manufacturing becomes priority over importation. Looking at the current trends however, importation is seems to be the choice over assembly. Reconfiguring the assembly lines for electric vehicles may be costly without the local demand.
To its credit however, the EVIDA sets clear policy directions for the government to boost local demand to attract EV production, trim or improve on current vehicle regulations, raise EV awareness, and build or incentivize a charging infrastructure.
Already a local fuel company, UniOil, is ahead of everyone else, setting up solar-powered EV chargers at two of its gasoline stations in Manila 4 years ago. The Philippines’ biggest mall chain, ShoeMart, also set up charging stations in select malls, and recently Shell Pilipinas launched “Recharge” at a mega-fuel stop South of Manila. It claims that its 180-kilowatt DC fast charger is the quickest in the country.
EVIDA also mandates the Philippine Board of Investments to devise an Electric Vehicle Incentive Strategy (EVIS) similar to the Comprehensive Automotive Resurgence Strategy Program (CARS), which the DTI earlier said would provide P27 billion ($484 million) in incentives.
Already, a local importer known better as Atoy Customs brought in the Wuling Hongguang Mini EV, which is the best-selling electric car in China. The local price is about P680,000 ($12,200) for the fully-decked out 4-seater version, though the price in China is only 33,000 yuan or about $4,890 (P275,000).
In a nutshell, the Philippines’ EVIDA law offers the following to further improve the electric vehicle industry:
- The importation of completely built-up (CBU) EVs
- Imported charging stations shall be exempt from the payment of duties (from 10% TO 30% depending on source) for eight years
- Users of battery EVs and hybrids are entitled to discounts on the motor vehicle user’s charge (MVUC), vehicle registration and inspection fee for eight years from the effectivity of EVIDA at 30% and 15%, respectively.
- Priority vehicle registration and renewal
- A special type of vehicle plate
- Exemption traffic management schemes to reduce vehicle volume
- Priority in the processing of franchises to operate public utility vehicles
- Permit for foreign nationals to be employed under technology transfer agreements, subject to the guidelines of the relevant government agencies.
- And what could tip the balance for EVs in the Philippines: dedicated parking slots
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