Officials press for zero tariff to accelerate EV industry growth

Trade and energy officials are hoping the new administration acts on calls to speed up the development of the local electric vehicle (EV) sector by approving an attractive incentive strategy including the temporary lifting of tariffs following the recent enactment of the Electric Vehicle Industry Development Act (EVIDA).

Former trade chief Ramon Lopez in his speech at a recent manufacturing convention said he supports an executive branch proposal for zero tariff on EVs to push for the growth of the domestic EV sector.

He said the proposal, currently being heard by the Tariff Commission, seeks to reduce the tariff duty for electric vehicles from 30% to 0% for a limited time, probably three to five years, to spur the adoption of EVs, especially cars, in the country.

This, Lopez said, will help create the ecosystem, charging infrastructure, and mass demand needed to encourage more manufacturers such as parts suppliers to supply the requirements of this emerging industry.

Patrick Aquino, director of the Department of Energy’s (DOE) Energy Utilization Management Bureau, said at the same summit that the DOE agrees with Lopez on the “suspension even for a limited time” of the tariff in order to support the establishment of a market for EVs.

With increased domestic production and investment, we hopefully can lower the initial upfront cost of EVs to make it more affordable to more Filipinos, Aquino explained.

EVIDA, or Republic Act No. 11697, was passed into law last April 15 with the aim to provide a national policy framework for domestic EV industry development. Among the law’s key objectives are to reduce air pollution, ensure the country’s energy security, and cut reliance on imported fuel for the transportation sector amid soaring oil prices through use of electricity and renewable energy.

With its passage, the new law is seen to address major challenges to the growth of the EV industry including a small market, the high initial cost of units, a support infrastructure for EV industries, and financing mechanisms for EV projects.

The legislation is also expected to provide opportunities for manufacturers, importers and local investors through fiscal incentives such as reduced importation taxes and duties under the Strategic Investment Priority Plan (SIPP), special discounted unit price for EVs and hybrid EVs, and preferential interest rates from banks.

For non-fiscal incentives, EVs are to be given priority registration and renewal with the Land Transportation Office, exemption from the number coding scheme, and streamlined customs processing of transportation parts and components, said Aquino.

In his presentation, he underscored the importance of narrowing the cost gap between EVs and traditional vehicles through the short-term reduction of tariff. For EVs, there will be a 10.71% reduction in retail cost if the value-added tax (VAT) is excluded, a 29.22% reduction if VAT and tariff are excluded, and 61.30% reduction in retail cost should VAT, tariff and battery be excluded.

At the same time, Aquino said that as the lead agency tasked to promote the adoption of EVs, the DOE has started preliminary work on the Comprehensive Roadmap for the Electric Vehicle Industry (CREVI), which will be presented for public consultations once finished.

The CREVI will provide the timeframe for the 5% mandatory share of EVs in corporate and government fleets in key sectors, a move aiming to generate demand and develop the industry and seen to provide the biggest motivation for the EV sector.

Entities required to ensure that 5% of their fleets are comprised of EVs include the following:
• Industrial and commercial companies such as cargo logistics companies, food delivery companies, tour agencies, hotels, power utilities and water utilities
• Public transport operators, including mini buses, buses, jeepneys, vans, tricycles, taxis, and transport network vehicle services
• Local government units (LGUs), national government agencies and government-owned and controlled corporations

Meanwhile, to implement the EVIDA’s policy objectives, Aquino said the role of the LGUs will be critical as they “will be on the frontlines of this deployment.” LGUs will be tapped to, among others, indicate green routes in their local public transport route plans, issue certificates of inspection to charging stations, provide segregated lanes for EVs, and issue permits for the construction or renovation of buildings pursuant to public works guidelines.

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