Tax Exemptions & Free Parking May Drive More EVs in the Philippines

Tax breaks and free parking could drive more electric cars in the Philippines after a new electric car bill becomes law.

Just a month after the Electric Vehicle Industry Development Act (EVIDA) in the Philippines took effect last April 15, several importers have ordered and a few have brought small Chinese electric cars to the country just to test the market. While this was going on, Nissan launched the Kicks and Toyota declared itself the ruler of the electric market with its 95% market share using its hybrid cars.

Philippine laws impose taxes on vehicle owners, ranging from road usage to purchase value, and impose high taxes on vehicles imported from non-ASEAN countries. Although trade agreements exist with China, these do not fully cover import duties on vehicles. The laws were designed to protect a now limited car manufacturing industry in the country.

However, under EVIDA, imported electric cars will be eligible for tax incentives under another law, 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 rapidly digitizing economy. Under the law, imported hybrids get a 50% discount on applicable excise duties. Battery-powered electric cars get full tax exemption.

The law has encouraged car companies to offer more hybrid cars. Based on the latest official figures from the Chamber of Automotive Manufacturers of the Philippines (CAMPI), as of the end of June 2022, a total of 1,013 xEVs have already been sold in the market, surpassing 2021’s total volume of 843 and 2020’s 378. A total of 962 of the 2022 sales are Toyota and Lexus models.

Collectively, Toyota now owns a 95% share of the electrified vehicle market with its hybrid electric cars such as the Prius, Prius C and Corolla Altis Hybrid, while the remaining 5% is split between BYD, Hyundai, Mitsubishi and Nissan, splashing on yet-to-be-known Chinese brands. There are also a sprinkling of local EV brands, and usually these companies make 3-wheeled electric passenger and electric transporters. These small businesses will greatly benefit from the law. In the past 10 years, almost 15,000 electric cars and hybrids have been sold in the country, but very few of these are cars, as most of them are electric tricycles and small buses for the last mile of public transport.

“With EVIDA, the Philippines is now in a stronger position to further attract high-tech investment and create high-value jobs in the country by taking advantage of the ongoing global shift to electric vehicles through strong national policy support,” former Department of Trade and Industry Sec. Ramon Lopez said just before handing over his department to the new leadership under the Ferdinand Marcos, Jr. administration.

The lapse of the bill in the EVIDA Act could not have come at a better time. In early May, fuel prices hit their all-time high, reaching P90 ($1.70) per liter. Averaging around P75 ($1.35) for gasoline and P78 ($1.40) per liter until the end of July, prices are stable at around P62 ($1.15) per liter.

EVIDA was also designed to create a new industry that will create more employment if manufacturing is prioritized over imports. However, looking at current trends, imports seem to be the choice over assembly. It can be expensive to reconfigure the assembly lines for electric cars without the local demand.

However, to its credit, EVida sets clear policy directions for the government to increase local demand to attract electric generation, trim or improve current vehicle regulations, raise awareness of EVs, and build or stimulate a charging infrastructure.

A Jaguar i-Pace fills up at the first Shell Recharge station south of Manila (Photo by author)

Already a local fuel company, UniOil, is ahead of everyone else, installing solar-powered EV chargers at two of its gas stations in Manila 4 years ago. The Philippines’ largest shopping 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 its 180-kilowatt DC fast charger is the fastest 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 (CARS) program, which the DTI previously said would provide P27 billion ($484 million) in incentives.

Already, a local importer, better known as Atoy Customs, brought the Wuling Hongguang Mini EV, which is the best-selling electric car in China. The local price is around P680,000 ($12,200) for the fully decked out 4-seater version, although the price in China is only 33,000 yuan or around $4,890 (P275,000).

The Wuling MiniEV is expected to be a local hit in the Asian markets it is targeting. It is already China’s best-selling electric vehicle. Photo courtesy of Wuling Hong Guang.

In a nutshell, the Philippines EVIDA Act offers the following to further improve the EV industry:

  • Import of completely built (CBU) electric cars
  • Imported charging stations must be exempt from paying customs duty (from 10% TO 30% depending on source) for eight years
  • Users of battery-powered electric cars and hybrid cars are entitled to a discount on motor vehicle user tax (MVUC), registration and control tax for eight years from the effect of EVIDAS of 30% and 15% respectively.
  • Priority registration and renewal of vehicles
  • A special type of vehicle plate
  • Exception schemes for traffic management to reduce vehicle volume
  • Priority in the processing of franchises for the operation of public utility vehicles
  • Permission for foreign nationals to be employed under technology transfer agreements, subject to the guidelines of the relevant public authorities.
  • And what could tip the balance for EVs in the Philippines: dedicated parking lots


 

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