Economy
Hungary to subsidise e-car purchases with HUF 5 bn budget
Here’s how the support will work
In 2016, the government will ensure 2 billion forints for the purchase of electric passenger cars and small utility vehicles (SUVs). Next year the budget is to be raised to HUF 3 bn.The funding may be applied for by natural persons, sole proprietors, civil organisations, local governments, public bodies and budget organisations.
There will be a wide range of available financing schemes too, i.e. different lease contracts will also be supported besides purchases.
The government is to put up 21% of the gross purchase price up to HUF 1.5 million.
In view of the scale of the support we can say that the government will be funding the VAT content of the purchase price. We have two key questions in this respect. Why did not the cabinet choose to cancel VAT on such products (most likely because of EU regulations), and what support will the buyers actually receive, i.e. whether dealers will make this aid their own by raising prices. The support available in the family housing allowance (CSOK) was mostly incorporated into the prices by the developers, hence buyers have witnessed climbing sales prices lately.
- The government will subsidise only the purchase of new electric vehicles. Its goal is to have as many new e-cars on the roads as possible.
- The grant will be available up to a purchase price of HUF 15 million.
Tenders may be submitted as of 27 October. The government is planning for the long run, and intends to keep up the subsidy also next year. Tender documentation will be made available this week at the government’s website (kormány.hu) and at e-mobi.hu.
What kind of cars can be in the programme?
If we look only at e-cars, a lot of them would fit into the cabinet’s support scheme. As the upper limit is HUF 15 million, however, Tesla is out of the question, but considering gross base prices some are good fits, such as (without aming to give an exhaustive list) Citroen C-Zero (cc. HUF 8.5 mn), Nissan Leaf (cc. HUF 9 mn), Kia Soul (cc. HUF 10 mn), VW e-up (cc. HUF 8.3 mn) or BMW i3 (cc. HUF 11.9 mn).A total of 94 684 passenger cars and SUVs were sold in Hungary in 2015. There was a 26.1% year on year growth in these two categories in the first eight months this year. Calculating with this kind of growth rate for the whole year we can expect nearly 120 000 passenger cars and SUVs to be sold in 2016.
Calculating with a HUF 2 bn subsidy budget and the maximum grant of HUF 1.5 mn per purchase, a total of 1 333 new e-cars may be included in the programme, which would be 1.1% of total car sales. (If the subsidy per purchase is less than HUF 1.5 mn, more cars may be sold in the programme, of course.) Next year’s HUF 3 bn budget (unless the conditions change) would be enough for subsidising the purchase of up to 2,000 e-cars.
E-car charging point programme already running
As an integral part of Hungary’s e-mobility concept, the Jedlik Ányos Plan, the cabinet has announced a tender for local governments about a month ago to expand the network of charging points. The incentive scheme offers funding for setting up charging points.Local governments can submit their tenders from 15 September (last week), but they should hurry because the deadline is 31 December 2016 and if the HUF 1.25 billion budget runs dry the tender may be closed even earlier.
The single, non-refundable subsidy is up for grabs for any local government that
- had more than 15 000 citizens based on 2015 Central Statistical Office (KSH) data;
- has not started the investment before applying in the tender; and
- wants to set up the chargers on its own property.
The subsidy may be used to set up two 11 kW or two 22 kW fast chargers and an at least 42 kW fast charging station. The available subsidies are in the table below.
Flash assessment
The announcement is very good news indeed for the expansion of the use of e-cars, as the cabinet intends to spend a total of HUF 5 billion for the support of electromobility over the next 1.6 months. The cabinet announced subsidies worth HUF 6.25 bn over the last few weeks that may be spent on the development of the e-car charging infrastructure and the increase of the number of e-cars on Hungarian roads.
By setting the cap on the purchase price at HUF 15 million the government apparently wants to avoid creating social tensions by subsidising the wealthier part of the population in buying luxury cars (Tesla models). At the same time, even the HUF 15 mn threshold is unbelievably high in local standards. The society, however, needs to accept that these vehicles, the new technology is this expensive - for now at least. For that reason, if we want to reach critical mass and if we want to make this technology affordable in the future, we need to support those who have the means to buy it now.
By making the announcements over the last few weeks the Hungarian government has taken yet another step towards reaching its goal set for 2020, namely to have 63 000 e-cars on Hungarian roads by then.
By setting the cap on the purchase price at HUF 15 million the government apparently wants to avoid creating social tensions by subsidising the wealthier part of the population in buying luxury cars (Tesla models). At the same time, even the HUF 15 mn threshold is unbelievably high in local standards. The society, however, needs to accept that these vehicles, the new technology is this expensive - for now at least. For that reason, if we want to reach critical mass and if we want to make this technology affordable in the future, we need to support those who have the means to buy it now.
By making the announcements over the last few weeks the Hungarian government has taken yet another step towards reaching its goal set for 2020, namely to have 63 000 e-cars on Hungarian roads by then.
