Government proposes changes to purchase and conversion subsidies for vehicles, aims to promote the use of electricity and gas in transport

On 11 November 2021, the Government submitted to Parliament a legislative proposal on purchase and conversion subsidies for low-emission vehicles.

The Government proposes that the current purchase subsidies for full electric passenger cars and gas powered trucks as well as the conversion subsidy for passenger cars continue in 2022 and 2023. In addition, subsidies could be granted for purchasing an electric truck in 2022 and 2023 and for purchasing an electric or gas-powered van in 2022.

"Use of electricity in transport is growing surprisingly fast also in Finland. The subsidies will speed up the transition, which will reduce greenhouse gas emissions from transport. Eventually, the electric and gas vehicles will be in the second-hand car market, making them available to an increasing number of people," says Minister of Transport and Communications Timo Harakka.

Another aim is to influence the purchase costs of vehicles powered by electricity or gas to make low-emission vehicles available to an increasing number of buyers. The new subsidy schemes would be adopted for a fixed term on 1 January 2022.

The new subsidies, together with the current purchase and conversion subsidies, are part of the Roadmap for Fossil-free Transport adopted by the Government in May 2021. The Roadmap for Fossil-free Transport aims to halve emissions from transport by 2030 compared to the level in 2005 and to achieve zero emissions by 2045. Passenger cars account for approximately 54 per cent and vans and trucks for approximately 41 per cent of emissions from domestic transport. This year, the sales of full electric cars have grown fast and new models are entering the market at an increasing pace.

Six subsidy schemes for purchasing low-emission passenger cars, vans or trucks

The draft bill includes proposals for six subsidy schemes:

1) Continuation of the present purchase subsidy for full electric passenger cars

As at present, EUR 2,000 in support could be granted for purchasing a full electric car whose total costs do not exceed EUR 50,000. Private persons would be eligible to supply for the subsidy.

2) Continuation of the present conversion subsidy for passenger cars 

As at present, EUR 200 in support could be granted when converting a petrol-powered vehicle to run on ethanol and EUR 1,000 to run on gas.

3) New subsidy for purchasing an electric van

A subsidy of EUR 2,000, EUR 4,000 or EUR 6,000 could be granted for purchasing an electric van, depending on the size of the vehicle. Both private persons and companies would be eligible to apply for the subsidy.

4) New subsidy for purchasing a gas-powered van

The subsidy would be EUR 2,000. Both private persons and companies would be eligible.

5) New subsidy for purchasing an electric truck

A subsidy of EUR 6,000-50,000 could be granted for purchasing an electric truck, depending on the size of the vehicle. Both private persons and companies would be eligible.

6) Continuation of the current subsidy for purchasing a gas-powered truck

The subsidy could be EUR 2,000, 4,000 or 6,000 for purchasing a truck using pressurised gas and EUR 14,000 for purchasing a truck using liquefied gas. Both private persons and companies would be eligible. Currently, the subsidy for purchasing a truck using pressurised gas is EUR 5,000 and for a truck using liquefied gas EUR 12,000.

When to apply for a subsidy?

The responsible authority in granting the subsidies is the Finnish Transport and Communications Agency Traficom. The subsidy for a full electric passenger car could be applied for after the purchase. Applicants for the subsidy for purchasing a van or truck should submit their application to the Finnish Transport and Communications Agency before purchasing the vehicle.

What's next?

A referral debate will be held on the proposal now submitted by the Government to Parliament. The timetable for the debate will be listed on Parliament's website (upcoming plenary sessions). After the referral debate, the proposal will be sent to a Parliamentary Committee.

The new act on temporary subsidies for purchasing a vehicle powered by alternative propulsion systems and for converting a vehicle to use an alternative power source is expected to enter into force on 1 January 2022 and remain in force until 31 December 2024. The period for the subsidy would be 2022-2023, but it could be applied for until 31 March 2023. Applications for a subsidy for vans could be submitted until 31 December 2022. A subsidy may be granted, if the appropriation reserved for the subsidies allows.

In the Budget for 2022, the Government proposes EUR 6 million in funding for the purchase and conversion subsidies.

Inquiries:

Päivi Antikainen, Director of Unit, tel. +358 50 382 7101, [email protected]

Maria Hyvönen, Senior Specialist, tel. +358 295 342 090, [email protected]