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Electric vehicles: 5,000 and going

Electric vehicles: 5,000 and going

There is no doubt that electric traction is the future. The question is only about the pace of market transformation, which always pursues economic benefits, quality and convenience. We sat down with Volodymyr Omelyan, Ukraine’s Infrastructure Minister, to talk about how ready we are to switch to electric vehicles and what needs to be done to this end.

– The number of electric cars has been growing fast worldwide, including Ukraine. What needs to be done so that the infrastructure meets the demand? Is it about incentives, preferences or restrictions for traditional fuels? Do you expect that the market will solve these issues itself?

– In January 2018, the number of electric cars registered in Ukraine crossed a 5,000 threshold. Our dynamics hold leading positions in Europe and worldwide. Infrastructure of charging stations has been developing at an appropriate pace and so far it’s Ukrainian businesses who bear this burden.

The Infrastructure Ministry plans to enter the charging stations market to test several pilot business models. I am deeply convinced that the state cannot effectively manage businesses independently, so all pilot projects will be implemented jointly with leading international companies.

However, we are taking concrete steps to restrict the use of traditional fuel in transport. Thanks to the Ministry of Infrastructure, our country has joined the Global Fuel Economy Initiative, which includes efforts to analyze road transport emissions and develop relevant fuel saving policies.

– The more electric cars mean the lower fuel sales and the lower excise tax revenues. Besides, there are privileges on these cars’ imports. How will the deficit be covered from lower tax revenues? Now it’s almost nothing but in another five years, there will be much more electric cars.

– We deliberately move toward a lower taxation of electric vehicles to make them more affordable to the public and launch a completely new market. Moreover, it will stimulate the renewal of the country’s general car fleet, which is now the world’s second oldest, following Cuba, in the embarrassing “wear and tear” ranking.

As for the Road Fund that we created last year, it’s a viable mechanism for financing the road sector, which will be updated in line with the country’s needs and budget challenges.

– It would be expedient to use widespread electric vehicles in utility services. What steps have been scheduled in this regard? Can the purchase of electric vehicles for the needs of utility companies become a new trend? The environmental feasibility is obvious here but has there been any feasibility study?

– The Working Group under the Ministry of the Environment of Ukraine has drafted bills on stimulation of the electric transport market, which we forwarded for further elaboration to the Verkhovna Rada’s Tax and Customs Policy Committee. To stimulate demand, it is being proposed to apply a tax discount to the purchase, including on credit, of electric cars, where buyers will see an 18% return of the car’s cost, as well as a zero rate on the registration fee, which is now 3-5%.

The adoption of these bills will allow us to pave the path toward developing the electric municipal commuter transport. The working group at the Ministry of Infrastructure of Ukraine has been working out this issue. We are deeply convinced that the transition to the electric municipal commuter transport should be gradual, and by 2030, we are to see the fleet renewal with electric transport exclusively.

– What needs to be done to increase Ukraine’s investment attractiveness toward production of electric vehicles (Mercedes announced plans to build six plants in the near future. But Ukraine is not among locations for deployment of new capacities in the company’s long-term plans, for example). Is it possible to talk about production of electric vehicles in Ukraine?

– The drafts developed by the working group under the Ministry of Infrastructure of Ukraine provide for a number of incentives for the deployment of capacities to produce electric vehicles in Ukraine.

For a period of 15 years, a zero tax rate is set for the profit tax on companies engaged in the production of electric cars, buses and trucks. Also, for the period of 10 years, it is planned to establish a zero duty and exemption from value-added tax for the first delivery (import) of a number of components for the production of electric cars, buses and trucks.

– There are rich lithium deposits in Ukraine. It would be logical to plan the production of rechargeable batteries in Ukraine in order to create added value here. What do we need to do in this regard?

– Among innovations proposed in the draft laws we are talking about there is a zero tax rate for a period of 15 years on corporate profits of companies engaged in the production of lithium-ion and lithium polymer batteries for the automotive industry, as well as on the sale of lithium produced locally.

There are several lithium and rare earth metals deposits in Ukraine (the largest three are Polohivske, Shevchenkivske, and Stankuvatskaya deposits), but we lack own lithium ore processing technologies. Therefore, an important task is to attract a world-renowned strategic investor to Ukraine’s lithium market, the one with its own technology.

– One of the issues that remain unresolved is the disposal of electric energy storage devices. What is your vision of solving this problem in Ukraine? Is the allocation of financing for research and development in this direction being considered?

– The disposal of energy storage devices is a potentially huge market for companies which will recycle batteries, or even better, re-use devices, such as Tesla Powerwall. I do not see the need at this stage to regulate the market that is just emerging. The same applies to the allocation of funding – this is a cost-effective business, which does not require state intervention.

. . . 

Read the complete version of the interview in the magazine TerminaL.

Tel.:(+38 044) 263-68-39, email: terminal.psychea@gmail.com

Interview  STC “Psychea”

 

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