Buses, Trucks, and Electric Cars May Become Cheaper in SP After ICMS Reduction

Thinking About The Economic Development Of The State, The Government Of SP Will Reduce The ICMS On Electric Cars, Buses And Trucks From The Current 18% To 14.5% From Next Year

This Wednesday (29), the government of the State of São Paulo announced that a series of tax reductions will take place in order to boost the economic recovery and the sale of electric cars, buses, and other electrified vehicles, after the stricter isolation required by the Covid-19 pandemic. Among the various measures taken by the government of SP is to reduce the Tax on Circulation of Goods and Services (ICMS) on electric vehicles, which is currently at 18%, and will drop to 14.5% starting in January of next year.

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ABVE Comments Positively On The Reduction Of ICMS In SP

The Brazilian Electric Vehicle Association (ABVE) views the government’s initiative positively as it seeks to incentivize the sector. The move in SP could make electric cars, buses, and trucks cheaper for the end consumer.

According to the Vice President of Light Vehicles of ABVE, Pedro Bentancourt, there may be a slight downward adjustment as long as the dollar maintains an average of R$ 5.30. A large portion of electric vehicles is imported from other countries and the dollar is still much heavier at this moment than an ICMS reduction.

Pedro also affirms that a 3.5% reduction in ICMS is equivalent to 2% at the consumer level. For instance, a 12% ICMS reduction would result in a final price decrease of 9% to 10%.

Can ICMS Be Eliminated For Electric Cars, Buses And Trucks?

Pedro claims that even with the government’s reduction in SP, the ICMS could still be lower for these vehicles, which would further stimulate the segment. The government of SP deserves credit for balancing the ICMS on electric cars, buses, and trucks; however, the ABVE, as an organization, believes that electric and hybrid vehicles should be treated with an ICMS almost equal to zero or at least lower than that of conventional combustion vehicles.

The ABVE representative emphasizes that in other countries, there are numerous incentives for the acquisition of electric cars, buses, and trucks. The trend for electric models is to become increasingly accessible to consumers. Day by day, manufacturing costs are decreasing and this cost is primarily linked to batteries.

Companies Seek Ways To Offer Affordable And Cheap Electric Models

Around the world, companies have been seeking methods to facilitate the acquisition of electric cars, buses, and trucks at an affordable price, such as in Russia, which announced a compact electric model called Zetta that promises to be the cheapest electric car in the world with great autonomy.

The model can achieve autonomy of 180 km and features a minimalistic, robust size similar to models launched in the Asian market.

When launched, the model will cost around R$ 65,000. In Brazil, the cheapest electric model currently is the JAC e-JS1. This model will be sold in the country for R$ 150,000 and is set to arrive in the Brazilian market this October, although reservations are already available. The JAC e-JS1 boasts an autonomy of 300 km on a full charge and a power of 61 horsepower.