Latvia introduces subsidies for new & used EVs

The Latvian government has announced a ten-million-euro subsidy programme for electric cars and plug-in hybrids. The purchase of new electric cars is to be subsidised with 4,500 euros from the beginning of 2022, and that of used electric cars and new plug-in hybrids with 2,250 euros.

The duration of the programme is set for two years, i.e. until the end of 2023 – or until the funds are exhausted. If the old car is scrapped, the subsidy is increased by 1,000 euros, according to the Ministry of Environment and Regional Development (Varam).

However, there are also factors that limit the subsidy: for example, it is a condition that the car is cheaper than 50,000 euros net – there is no gradual subsidy as in Germany. In addition, the minimum holding period of the vehicle is four years.

While such conditions – albeit at a different level – are also included in similar subsidy programmes in other countries, the announced Latvian subsidy has a special feature: a minimum mileage. The subsidised electric car must be driven at least 15,000 kilometres per year (i.e. an average of about 40 kilometres per day) – or a total of 80,000 kilometres over four years. If less is driven, part of the subsidy must be paid back.

According to the Minister of Environmental Protection, Arturs Toms Plešs, the subsidy is intended to increase the spread of e-vehicles and thus also provide incentives for more charging stations. “It is clear that we will not replace all cars, but we will give a positive impulse to the market and incentivise municipalities to plan charging stations for electric cars,” Plešs said.

The programme of the Ministry of Environmental Protection has also been criticised, for example by the Bank of Latvia. A spokesperson stated that they would like to see a more strategic approach, such as whether the emission reductions calculated for the programme are the most effective way to save CO2.

lsm.lv, varam.gov.lv (in Latvian)