Don't Stall Progress: Why Cutting EV Incentives Is a Step Back

Volodymyr Kreidenko, Ukrainian MP, deputy chairman of the Committee on Transport

Today, electric transport has become a symbol of the global transition to a low-carbon economy. In the countries of the European Union, the USA, and China, we observe not only growing electric vehicle (EV) sales but also the formation of a comprehensive ecosystem encompassing infrastructure, innovation, and regulation. Ukraine is also actively integrating into these transformative processes. Since 2020, the electric vehicle market in Ukraine has shown dynamic growth, driven by changes in consumer behavior and favorable government policies in taxation and customs regulation. In 2024–2025, the share of electric vehicles in total car sales nearly doubled, and the number of charging stations across the country exceeded 2,000. This became possible thanks to coordinated efforts by lawmakers, businesses, and civil society. However, Ukraine now faces new challenges, including the debate on whether to maintain import benefits for electric vehicles.

Electric cars are gradually displacing traditional diesel and gasoline vehicles from the Ukrainian market. According to available statistics, in just the first half of 2025, over 8,000 electric vehicles were imported to Ukraine, most of them used. Additionally, the opening of new dealerships, service centers, and charging stations indicates the formation of a full-fledged electric vehicle market in Ukraine. Government policy plays a significant role in this transformation. Since 2018, there has been a preferential import regime: EVs are exempt from VAT, import duties, and enjoy a symbolically low excise tax. According to the Ministry of Economy, these incentives effectively reduce the cost of vehicles by 25–35% compared to countries without such tax breaks.

However, the significance of electric vehicles goes far beyond personal transportation — they are a key factor in the structural transformation of the economy. Investments in charging infrastructure already amount to hundreds of millions of hryvnias: demand is growing for electrical technicians, engineers, and software developers for managing the charging station network. In large cities such as Kyiv, Lviv, Kharkiv, and Odesa, electromobility is gradually reshaping the transportation ecosystem. Parking privileges are being introduced, and pilot municipal electric transport projects based on electric trucks are being launched. Especially important is the prospect of reducing fuel imports. According to analysts at the National Academy of Sciences of Ukraine, if the share of EVs in the total vehicle fleet reaches 15%, it would cut fuel import costs by over $1.5 billion annually. Amid war and unstable fuel supplies, this becomes critically important. At the same time, the development of related industries — battery technologies, lithium processing, power systems — will also have a multiplier effect, strengthening the country’s technological independence.

For households, owning an electric vehicle is becoming not just a trend but a form of savings. The average cost of a full battery charge is 7–10 times lower than fueling a gasoline or diesel car. Moreover, electric cars require less maintenance, lack complex transmissions, need fewer component replacements, and under moderate usage can help avoid costly repairs. In the long run, this reduces financial burdens on family budgets and increases the financial resilience of citizens, especially in times of crisis.

The environmental effect of transitioning to electric transport should also not be underestimated. Ukrainian cities systematically exceed air pollution levels, particularly due to the aging vehicle fleet. Replacing internal combustion engine (ICE) vehicles with EVs reduces city noise, improves air quality, and lowers public health risks. Additionally, this transformation supports Ukraine's European integration commitments — particularly in reducing greenhouse gas emissions under the Paris Climate Agreement.

However, the government discussion about eliminating EV import benefits forces a closer look at the potential consequences of such a decision. First and foremost, removing tax privileges would increase final vehicle prices by 30–35%, making electric cars unaffordable for most Ukrainian consumers. The most vulnerable group would be those buying used EVs — a segment that dominates the Ukrainian market (up to 90% of all EVs sold). Higher prices could also reduce the appeal of EVs compared to ICE vehicles, stimulating a reversal back to traditional cars. This, in turn, would jeopardize environmental goals and hinder the development of charging infrastructure, as operators would lose the economic motivation to invest in a shrinking user base.

Another critical aspect is social justice. If customs policy becomes a barrier to transitioning to electric transport, access to clean mobility will remain limited to the economically active segment of the population. This would deepen economic inequality and complicate the development of urban initiatives in the regions. In this context, an adaptive approach should be considered — for example, preserving benefits for low-income groups, large families, pensioners, or combat veterans. Introducing a subsidy program or partial reimbursement for the purchase of used EVs could be a compromise that does not violate fiscal discipline.

Risks of technological stagnation, delays in modernizing logistics chains, and loss of investment in production capacities — all these must be assessed comprehensively. While import incentives are a temporary measure, they serve a systemic function as economic stimuli for a new industry. Abrupt cancellation without a prepared transition period could trigger not only an economic shock but also a loss of investor trust, particularly among those who have already invested in infrastructure, service networks, and personnel training. In the long term, this could cause Ukraine to lose its competitive advantage in the Eastern European EV market.

At the same time, in the context of global trends, maintaining EV import benefits is not only economically reasonable but also a politically motivated move. It signals policy consistency, commitment to sustainable development, support for innovation, and alignment with the European market. Governments in the EU, USA, and China actively subsidize electric transport, recognizing its strategic significance for energy security and environmental protection. Ukraine, which is on the path of European integration, cannot afford to fall behind.

Currently, Ukrainian legislation stipulates that these benefits are temporary — until January 1, 2026. Given the ongoing full-scale Russian military aggression against Ukraine and the imposition of martial law, the country's economic conditions remain unstable and risky. A significant share of businesses, logistics chains, and production processes operate under limited resources and high unpredictability. At the same time, it is precisely under such conditions that it is vital to maintain incentives for introducing new technologies, attracting investment, and "greening" the economy.

Setting a fixed expiration date for these benefits (e.g., January 1, 2026 or 2027) does not account for force majeure conditions that may impact the ability of businesses to implement investment projects, import, and sell electric vehicles. A fixed date does not align with the challenges of wartime, and thus poses the risk of abruptly ending benefits at a time when the country may still be mobilizing resources for defense and recovery.

That is why I registered draft law No. 13351-1, which seeks to strike a balance between the state’s fiscal interests and citizens’ needs. It proposes linking the duration of benefits to the end of martial law and extending them for one year after its termination or repeal.

Extending the preferential regime would help avoid a sharp price hike, maintain market momentum, and provide time to develop a long-term strategy.

In conclusion, electric mobility in Ukraine is not just about transportation. It is about the economy, the environment, social justice, and strategic independence. Preserving import benefits is not a concession — it is an investment in the future. And precisely at the moment when the country begins to recover from the shocks of wartime, it is crucial not to lose what has been achieved, but to consolidate success and move forward. Ukraine has every chance to become a regional leader in electric transport — provided it pursues a consistent, predictable, and socially oriented policy.