It has just been rumored in the public domain that the Ministry of Environmental Protection and Regional Development (MEPRD) plans to provide support in the amount of 4,500 euros for the purchase of new electric cars under the Emission Allowance Auction Instrument in order to promote the reduction of greenhouse gas emissions.
[1] This will definitely be a great incentive for fluctuators, who are deterred from buying electric cars by the price, even though last year Latvia was one of the first pioneers in the European electric car market. The ecological aspect is an important argument in making a choice in favor of such cars. However, in addition to a number of benefits, a number of challenges still need to be addressed in order for Latvia to be able to claim that electromobility is really keeping pace with Europe.
Last year, due to the pandemic and other circumstances, sales of new cars decreased both in the Baltics and elsewhere in Europe. Meanwhile, electric vehicle sales in Europe have grown by an average of 137% compared to 2019. Last year, Latvia even experienced a 358% increase in sales. [2] This is not surprising – the popularity of electric cars in Europe is growing, which can be explained by several factors.
First of all, a very wide range of products is now available to users: almost every car manufacturer has created its own electric car model and some – even several. Secondly, more and more information has recently become available, as the advantages and disadvantages of electric cars are discussed in detail in various forums and discussions, programs and podcasts. Thirdly, infrastructure is evolving: more and more charging stations are being set up and many countries are expanding their network of charging stations, as insufficient charging capacity was one of the main arguments that deterred potential buyers from buying electric cars. Finally, car manufacturers are rapidly exploring this niche, as the European Commission’s climate-neutral course sets strict standards for CO2 reduction policies. As the emissions of electric cars are reduced by 100%, manufacturers are interested in stimulating their sales through various information and discount campaigns. In short, electric cars are now in vogue, becoming more powerful, more spacious and more comfortable, but prices are falling as supply grows.
And here we come to one of the main incentive instruments for the development of the electric car segment, which is finally marked in Latvia’s plans: in many countries there are various support programs for the purchase of new electric cars on average 4000-6000 euros, as well as tax breaks for electric car owners. It is not that people do not want to drive an electric car. However, it is more expensive than a car with an internal combustion engine, which discourages many from making such a choice, and the support program is expected to close this gap. While the first buyers of electric cars were mainly private individuals who bought such cars in the net interest as a second or third car in the family, electric cars are now increasingly chosen by companies for specific functions: delivery, public transport for customers or their company as a marketing tool. It is therefore important that future support is available not only to individuals and public or municipal authorities, but also to businesses. Given the global demand for electric cars, which affects delivery times, the availability of support must be long enough to achieve the goals set by the MEPRD.
If until now the image of the owner of an electric car was a buyer with a private house, now those who do not have the opportunity to install their own private charging station also buy an electric car. There are charging options in the city, and even on a longer trip, there will be charging options! There are enough charging points in Latvia so that you do not have to stay on the road with an empty battery. However, this infrastructure definitely needs to be expanded much faster than has been the case so far to make it easier for drivers to plan a route. Definitely a positive effect will be given by the Cabinet of Ministers Regulation No. 331 “Regulations on the Latvian construction standard LBN 208-15“ Public buildings ”” 5.1 Requirements for electromobility, which stipulates that in public buildings with more than ten parking lots there must be at least one electric vehicle charging point, but every fifth car park must provide channels for electrical cables. charging points for electric vehicles could be set up.
It is no secret that many people choose an electric car precisely because of the ecological aspect. Although the production of electric cars requires certain energy resources, throughout the life cycle of a car, an electric car is still more environmentally friendly than a car with an internal combustion engine. In addition, in a city with regular congestion and heavy traffic, it is also a matter of improving air quality. The latest technology also allows you to recycle most used battery cells well enough. Many European cities have a so-called ‘green zone’, in which only vehicles with low or no emissions are allowed to enter. There are no such regulations in Latvia yet, but seeing that we are starting to follow the examples of other EU countries, we may be able to expect such a solution in Latvia as well.
The new BloombergNEF study predicts that electric car production in Europe will be cheaper than fossil fuel vehicles in all light vehicle segments by 2027 at the latest, while by 2035 electric cars could reach an average of 85% of new sales and even 100% across the EU, if the legislation provides for stricter vehicle emission reduction targets and support for charging infrastructure. [3] Simply put, it will be more profitable to produce an electric car, or at least a hybrid, and the offer in the climate-neutral vehicle segment will become wider. Although we do not produce cars in Latvia, we will have to keep pace with these decisions and adapt to a reality that will change more and more rapidly. I think the day when buying an electric car will be cheaper than a car with an internal combustion engine is not behind the mountains. However, we must be prepared for this by providing the appropriate infrastructure to slightly anticipate events rather than pursue them.
[1]https://www.varam.gov.lv/lv/jaunums/varam-strada-pie-atbalsta-mehanisma-elektrotransportlidzeklu-iegadei
[2] Ria.com Marketplaces study
[3] https://www.transportenvironment.org/sites/te/files/publications/2021_05_05_Electric_vehicle_price_parity_and_adoption_in_Europe_Final.pdf
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