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In an increasingly complex economic scenario, Brazilians who dream of purchasing an electric or hybrid car face a new financial obstacle.
The significant increase in import tax on these vehicles is a reality that promises to shake the market. This change, which comes into effect from today, threatens not only consumers, but also the future of the national automotive industry.
New Tax Increase
Starting today, July 1, 2024, the import tax for hybrid and electric cars was increased again in Brazil. Hybrid models are now taxed at 25%, while plug-in hybrids face a 20% tariff.
Fully electric cars are not left out and will have an 18% tax. This is the second adjustment since January this year, when tariffs, previously zero since 2016, were once again charged in a staggered manner.
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Impact of Adjustments
The increases don't stop here. New adjustments are scheduled for 2025 and 2026, as shown in the table below:
- Hybrids: 25% in July 2024, 30% in July 2025, and 35% in July 2026.
- Plug-in hybrids: 20% in July 2024, 28% in July 2025, and 35% in July 2026.
- Electrical: 18% in July 2024, 25% in July 2025, and 35% in July 2026.
According to National Association of Motor Vehicle Manufacturers (Anfavea), anticipating these charges is an urgent need.
The president of Anfavea, Marcio de Lima Leite, highlighted the dangers that the growing volume of imports poses to the competitiveness of the Brazilian automotive industry.
“We remain hostage to imports. They attack our competitiveness, now and in the future”, said Leite during the AutoData Seminar.
Electric Car Manufacturers' Strategies
Several manufacturers are already adapting to this new reality. A BYD, for example, anticipated the tax increase by bringing a cargo ship with more than 5,5 cars in May, ensuring that these vehicles would not be affected by the adjustment. However, it is up to the automakers themselves to decide whether or not to pass on this additional cost to consumers.
National Production of Electric Cars:
Despite the growing interest in electric and hybrid cars, Brazil still does not produce these models on a large scale. Currently, only models Toyota Corolla and Corolla Cross are manufactured locally with hybrid engines. Investment in the sector is significant, exceeding R$80 billion in 2024, but it will still take some time for other national hybrid models from major brands to reach the market.
Electric Cars and the Advancements of Chinese Brands:
Chinese brands are at the forefront of this scenario. Caoa Chery will start production of the Tiggo 8 hybrid in 2024, in Anápolis (GO), using the CKD regime, where parts are imported from China for assembly in Brazil. GWM also confirmed the production of pre-series models of the Haval H6 in Iracemápolis (SP), expected to hit the market in the first quarter of 2025.
Traditional Brand Plans:
In addition to Chinese brands, other traditional manufacturers they also accelerate their hybrid development plans.
Stellantis will launch micro-hybrid models in 2024. Volkswagen and Renault will follow the same line, with launches scheduled for 2027.
In 2028, Honda promises its first national hybrid car with a flex engine. Chevrolet, in turn, announced plans for the production of hybrid engines in Brazil, but without a defined date yet.
This increase in import taxes on electric and hybrid cars brings a new dynamic to the Brazilian automotive market. And so, Will Brazil be able to compete in the global electric and hybrid vehicle market or will it continue to depend on imports? Leave your opinion in the comments!
