Tax return ends bad week electric cars – 11/11/2023 – Eduardo Sodré

The last few days have been difficult for manufacturers and importers of hybrid and electric cars.

After the change in the text of the Tax Reform that included flex-fuel cars in the benefits package for the North and Northeast regions, the new Import Tax policy will also have an impact on the prices and profitability of electrified cars.

The new rule, published this Friday (10) by the Executive Management Committee of the Chamber of Foreign Commerce, establishes the gradual return of the tax on these vehicles that emit less pollutants.

The statement released by the committee says that the objective of the measure is to “accelerate the decarbonization process of the Brazilian fleet and contribute to the country’s neo-industrialization project.”

However, entities and automakers that were affected claim that the combination of recent measures ends up discouraging investments in hybrid and electric cars in Brazil.

“These measures mainly serve the lobby of associations that defend fossil fuels, and not the interests of consumers and Brazilian society, which support modern and non-polluting transport”, says, in a note, Ricardo Bastos, president of ABVE (Brazilian Association of the Electric Vehicle).

The executive refers to Anfavea, which defended the return of Import Tax collection. The entity also released a statement approving the resumption of the tax.

“The long period of exemption was important and sufficient for the introduction of these technologies in Brazil, and the gradual increase in the Tax will also allow the import of these vehicles without major impacts in the coming years”, says the note from the automakers’ association, which mentions the system of quotas that accompanies the measure.

Companies have deadlines to obtain tax exemption within predetermined amounts. In the case of 100% electric cars, for example, the quotas will be US$283 million until June 2024, US$226 million until July 2025 and US$141 million until June 30, 2026.

The resumption of fare collection will also occur in stages.

For 100% electric vehicles, which are currently exempt from tax, the tariff starts at 10% in January and reaches 18% in July. In July 2025, the rate reaches 25%. The next stage takes place in July 2026, when the same 35% of combustion models return.

“In the case of hybrid cars, the tax rate starts at 12% in January 2024; 25% in July 2024; 30% in July 2025; and reaches 35% only in July 2026”, informs the Committee Management Executive at the Chamber of Foreign Commerce.

For Abeifa (importers’ association), the start of collection in January undermines the plans established by the brands.

“It is too punitive for our sector, especially when our associates have already structured their strategic/commercial planning for the next year, in addition to having production underway at their headquarters, units in transit by sea and even commitments already signed with the authorized dealer networks for the first months of the coming year”, says the entity, in a note.

The measures were taken before the publication of the country’s new automotive regime, which will replace Rota 2030. The text was scheduled for September, but is going back and forth due to impasses between automakers, associations and ministries.

“The government decided to close the market to low-emission technologies before companies know what the rules of the game will be for the future automotive regime”, says Ricardo Bastos, from ABVE.

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