Global EV Transportation Review

A revised set of incentives and support measures were announced in 2022 for the electric vehicle market. The overarching goal is to progress with decarbonisation. The National Integrated Energy and Climate Plan (PNIEC) lays out the targets in this regard. Also important is to stay aligned with the European Union goals in clean energy and its share in total primary energy consumption including transportation. The EU’s goal to ban sale of new ICE vehicles from 2035 is incumbent upon Italy, like other member countries of bloc.

In April 2022, the government approved an annual €650 million allocation for the electric and other low-emission vehicles for the period through 2024. The funding was to enable purchase incentives. A subsidy worth €5,000 was made available for the purchase of new electric vehicles that cost up to €35,000 without value added tax. The subsidy amount includes a €2,000 contribution for scrappage of ICE vehicle. In case of the plug-in hybrid vehicles costing up to €45,000, the subsidy was up to €4,000, including a planned €2,000 contribution for old unit scrappage. For the year 2023, the outlay for the electric vehicle incentives is at €150 million.

The formulated incentives have scope for the conventional vehicles as long as their emissions are in the range of 61-135 gm CO2/km. The ambit of subsidies also includes non-electric motorbikes and mopeds. The disbursal of subsidies will follow the principle of ‘one subsidy per household’ including the cases of leasing contracts. A part of the allocated funds for subsidies is for rental companies, but the stipulation is that the vehicles should be held for at least a year from purchase.

Subsidies are separately allocated for electric vehicle procurement by the small and medium enterprises. The incentives are structured by vehicle weight – €4,000 for up to 1.5 tonnes, €6,000for the ones ranging 1.5-3.5 tonnes, €12,000 at 3.5-7.0 tonnes, and €14,000 for 7.0-12.0 tonnes. This set of incentives was budgeted for €15 million in disbursal through 2023.

Leading automakers have been making investments towards preparing for the transition to electric vehicles. The planned investments are likely to manifest in varied forms, such as in terms of joint ventures for competitive and cost-effective locations globally. The luxury auto manufacturer Ferrari, for instance, announced that its first electric vehicle will be launched in 2025. The company projects full-electric and hybrid-electric vehicles to contribute 80% of its sales by 2030. A similar luxury brand Lamborghini is aiming for the similar pivot, with a plug-in hybrid vehicle in 2023 and a full-electric by 2030.

An important planned investment in Italy, among automakers, is that of Stellantis. The company, through its venture ACC (with Mercedes Benz and TotalEnergies) plans three Gigafactories of which one of them is slated for Italy. The planned battery capacity will be established by reconfiguration of its existing engine and gearbox plant at Termoli of Italy. Development work will start from 2024, with initial operations planned for commencement within 2026. The total investment is estimated at €2.3 billion, aided by public funding worth €370 million.

Since last 1-2 years, public procurement of electric buses rose at a rapid pace. Some of the leading cities are thus placing orders for electric buses, as replacement for the existing transit fleet of operators. Leading OEMs such as Solaris have cornered most of the orders in recent year, though others, especially Chinese manufacturers are gradually coming to the fore. In January 2023, the transit company Busitalia signed a framework agreement with Iveco Bus for 150 electric buses required between 2023 and 2025. Notably, the manufacturer Iveco started its new powertrain facility in Turin at Italy in October, in anticipation of the demand. Various other entities are reported with making a market entry to tap into the demand. In June 2022, Enel X (subsidiary of Enel) and Arrival entered into a partnership to test electric bus launch in Italy. The testing, involving Enel X’s advance charging services, was aimed at assessing the feasibility of the Italian market.

For practically all investors, a significant part of the attention is towards the Italian charging network sub-segment. With the wide scope of expansion, private players have a huge untapped opportunity even with the upcoming publicly-funded capacities. In June 2022, the electrical equipment manufacturer ABB, under its business segment ABB E-mobility, launched a DC-based fast- charger production facility in Valdarno of Italy. This entailed a $30 million investment, with the result that the company could now avail of a double production capacity.

Fast-charging is also the focus of several joint venture investment projects. Enel X Way and Volkswagen launched the joint venture Ewiva to build a high-power charging network of 3,000 charging points across Italy. Each such charging point will be based on rated power of up to 350kW and will be based on renewable energy. The first such charging station was inaugurated in Rome, as of December 2022. The entire project could be completed by 2025. Among other areas, the emerging technology options such as induction charging are under active consideration. In June 2022, the Brebemi highway in Italy’s Lombardy had a successful test-launch of an induction charging system, involving an electric bus and passenger car. Funding support for the charging capacities also include institutional support. As of March 2022, the Italian charging service entity Duferco Energia, received €26 million in funding through contracts entered into with Cassa Depositi e Prestiti, Crédit Agricole Italia, and the European Investment Bank.