The Council of Ministers in Spain has approved the revival of its electric vehicle subsidy program, known as Plan Moves III, which had expired.

The program will continue until December 31, 2023, with a budget of €400 million allocated for subsidy support.

Under this plan, consumers purchasing electric vehicles can receive subsidies of up to €7,000, provided they also scrap an older vehicle.

For commercial vehicles, subsidies can reach up to €9,000 when an old combustion van is surrendered.

These subsidy amounts may increase by up to 10% in certain circumstances, particularly for vehicles designated for persons with disabilities.

Additionally, the plan includes provisions for support for electric vehicle charging infrastructure, with funding percentages ranging from 20% to 80%.

This revival comes after the previous program was halted when the Spanish Congress rejected an omnibus decree on January 22, which included Moves III and a previously proposed tax deduction of up to €3,000 on personal income tax for electric vehicle purchasers.

The tax deduction has also been reinstated.

The reintroduction of Moves III addresses recent concerns from automotive manufacturers regarding a sharp decline in electric vehicle orders amid uncertainty over available subsidies.

In early 2023, the CEO of Hyundai Spain described the situation as chaotic, noting a complete halt in the subsidy program in January, leaving the market in disarray with cancelled orders.

Other major manufacturers, including Volkswagen and BYD, echoed similar sentiments.

The dealerships' association Faconauto reported a 50% drop in electric vehicle orders compared to the previous year.

Despite these concerns, sales of electric vehicles surged by 69% in the first quarter of 2023, approaching 20,000 registrations, according to industry data.

Sara Aagesen, the Third Vice President and Minister of Ecological Transition, stated that the Moves III subsidies would be retroactive, benefitting individuals who have purchased electric vehicles since the program's suspension on January 22. The renewal of Moves III will provide the automotive sector and the government with additional time to reorganize future electric vehicle subsidy strategies.

The government is considering options for either a European-level support program for electric vehicle purchases, as suggested by the European Commission's Automotive Industrial Action Plan, or maintaining a national program with direct aid without involving regional administrations.

Aagesen highlighted that the new iteration of Moves III will include streamlined application processes, responding to demands from consumers and the automotive sector for more efficient access to subsidies.

Requests for amounts below €100,000 will now require fewer supporting documents.

This is expected to result in quicker processing times by regional administrations responsible for managing the program.

The transport sector is a significant contributor to greenhouse gas emissions, accounting for 30% of total emissions, with road transport alone responsible for 28%.

Despite the recent surge in electric vehicle sales, they still constitute only 5% of total vehicle registrations in Spain, compared to over 15% in Portugal.

Aagesen expressed optimism that the certainty provided by the renewed subsidies would sustain positive sales trends.

The government's measures aim to accelerate the energy transition and promote a low-carbon transport system while addressing the current uncertainties in the international automotive landscape.

The renovation of the Moves program has been welcomed by the NGO Transport & Environment, which nonetheless emphasizes the need for improvements to the subsidy design.

The organization has criticized previous iterations for their bureaucratic complexity and lack of immediate benefits for buyers, indicating that the subsidy process has been historically slow and cumbersome.