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Electric Vehicle Grant Application in Full Swing: Businesses Recognize the Benefits

The call effectively excludes profiteers, CIB Leasing CEO Csaba Fekete.
He also discussed the number of applications received so far, what to pay attention to when applying, and who is ineligible for the grant. Data also suggests that the total grant amount is unlikely to be exhausted by March 31st.

THE ELECTRIC VEHICLE GRANT APPLICATION STARTED ON FEBRUARY 5TH. BY THE NEXT MORNING, 1121 DOMESTIC BUSINESSES HAD SUBMITTED APPLICATIONS FOR 1440 VEHICLES, WORTH 5.6 BILLION FORINTS. BASED ON THE LATEST DATA, WHAT IS THE CURRENT NUMBER OF APPLICATIONS?

According to our latest data, approximately 1400 applications have been submitted, aiming for a total grant amount of about 7 billion forints, which has yet to reach a quarter of the total grant limit. After the initial enthusiasm, interest seems to decline, but this is completely natural and aligns with processes observed for other grant schemes.

For this particular grant, our data indicates that one-third of the applications were submitted in Budapest and two-thirds in the countryside, with no surprises there.

The application period runs until March 31st, and it appears that the grant limit is unlikely to be exhausted by then, given the current intensity, which would last for approximately two years.

We see that various conditions determining the amount of support - such as battery capacity, net purchase price, and the number of employees - suggest an average grant of about three million forints.

This scheme effectively stimulates the market, as expected, since international trends also show a strong correlation between government grants and sales.

APPLICANTS CAN SUBMIT FOR THE GRANT UNTIL MARCH. WHAT SHOULD APPLICANTS PAY ATTENTION TO?

Two important things about the application process are the requirement to apply electronically, and the application itself must be signed with a digital signature. We anticipate that a significant number of businesses will enter the realm of digitally signed documents with this procedure – those enterprises without digital signatures will need to dedicate time to this administration. It's also important to note:

the grant is on a reimbursable basis, to be finalized within 20 months, even if the applicant resorts to financing,

which, from our perspective as a leasing company, means the most popular corporate car financing method, open-end leasing, is excluded due to significant tax risks.

In our view, businesses need to decide whether they want to utilize the VAT advantage of OPEN-END LEASING or the GRANT. Due to the reimbursable nature and the 20-month window, concurrent usage of both schemes is not feasible due to legal regulations, even though the grant in principle does not exclude it.

GOOD NEWS FOR BUSINESSES: NEW GRANT SCHEME FOR ELECTRIC VEHICLES LAUNCHED

Local businesses can apply for a non-repayable state contribution to purchase purely electric vehicles from a 30 billion forint pool. The grant support significantly reduces the price advantage of traditional internal combustion vehicles, making the purchase of e-vehicles more attractive and profitable.

Businesses must also be aware of who is INELIGIBLE for the grant:

newly established companies, taxis, car rental agencies, and enterprises listing car sales among their activities are excluded from the circle of beneficiaries, as well as companies with extremely low revenue

– the net price of the vehicle cannot exceed the company's previous year's revenue. Also, the mandatory full comprehensive insurance prescribed by the grant has a price level about three times higher than that of similar traditional combustion engine vehicles, which could reach 800,000 to 1.1 million forints annually.

FOR WHICH VEHICLES IS THE GRANT APPLICABLE, AND FOR WHICH IS IT NOT?

The grant can only be claimed for purely electric vehicles; plug-in hybrids and self-charging options are excluded. The vehicle purchased with the grant must be new, and the registration must not be older than December 9, 2023. Current data reveals that 90 percent of businesses purchasing electric cars opt for passenger vehicles, while 10 percent go for light commercial vehicles, which is largely determined by market supply and reflected in the grant applications.

THERE ARE ALWAYS PROFITEERS. HOW DOES THE CALL PROTECT HONEST APPLICANTS?

Besides the exclusions mentioned earlier, an important regulation is that vehicles purchased with the grant cannot be alienated (until at least December 31, 2027), cannot be leased out, nor removed from operation. Fortunately, we can confidently state:

the grant effectively excludes profiteers.

ARE THERE OTHER FINANCING OPPORTUNITIES?

Various financing schemes are not excluded, and if businesses have Széchenyi investment or liquidity credit frames, the call does not prohibit financing vehicle purchases from them. The Széchenyi Leasing scheme is only applicable for the purchase of light commercial vehicles. However, if a company is considering leasing, a signed leasing contract must be submitted with the grant application.

WHY IS IT WORTHWHILE FOR DOMESTIC BUSINESSES TO USE ELECTRIC VEHICLES?

Using an electric vehicle means no registration or company car tax for the business, and it's also exempt from wealth transfer taxes, so calculating the grant window up to 2027, savings of an extent comparable to the amount of the grant can be achieved. Additionally, green license plate benefits and operational cost savings, in terms of both per-kilometer running costs and service bills, come into play.

HOW DO YOU VIEW DATA ON THE TRANSITION TO GREEN ENERGY AMONGST DOMESTIC SMES?

Last year, 128,469 passenger cars and light commercial vehicles were put into operation, with 73,800 going into corporate ownership. While electric light commercial vehicles are still barely visible in this mass, the 5,798 electric cars (2023) represent about 5 percent of the market.

With the EU average at 18 percent, over 20 percent in Germany, and 75 percent in Norway, we have some catching up to do. Yet, compared to 2022, there has been a 23 percent increase, and a 35 percent increase compared to 2021, in the registration of purely electric vehicles by number.

WHAT IS THE PURCHASING ENTHUSIASM LIKE AMONG HUNGARIAN BUSINESSES?

The current grant is sure to have a positive and visible effect on this process, partly because according to our surveys, half of the buyers did not plan on purchasing an electric car, and some might have postponed vehicle acquisitions altogether, but the grant has influenced their decision. Since there's also a possibility to extend the grant deadline, we are confident that

if the grant remains until the funding is exhausted, it would significantly increase the proportion of electric vehicles in business fleets.
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