The Netherlands, despite its small size, is rich in culture, history and beautiful places. The country is famous for its canals, colorful tulip fields, picturesque windmills, traditional clogs, a large variety of cheeses and its cycling culture. The Netherlands is also one of the main markets for electric vehicles, both in Europe and globally. In 2020, 21% of all newly registered cars were battery electric vehicles (BEVs) and 4% were plug-in hybrid electric vehicles (PHEVs). This high adoption rate, especially of BEVs, is a testament to the progressive electric vehicle policies implemented in recent years.
To promote the electrification of the national car fleet, the Dutch government offers strong incentives to reduce the cost for buyers and owners of an electric vehicle. This is particularly true for BEVs, which are subject to the government’s zero-emission transportation strategy. Individuals buying or leasing a new battery-powered electric passenger car can claim 4000 € of the government. In the case of a used battery electric car, the amount is 2,000 €.
In addition, BEV owners benefit from exemption from the single registration tax and annual property taxes, or benefit from a reduction in the case of plug-in hybrid vehicles. Conversely, buyers and owners of conventional combustion engine vehicles are subject to particularly high vehicle taxes. compared to other European markets.
How do these policies affect the household budget of people who want to buy a new car? Looking at the illustration below, one thing catches your eye: Consumers get the best deal by purchasing a BEV instead of a comparable PHEV, gasoline or diesel model. This is thanks to the € 4000 purchase premium, exemptions on registration and property rights, and relatively low consumption costs.
Taking VW’s ID.3 as an example, the deduction of the government bonus of € 4,000 from the tax value (which results in a base price and value added tax lower than shown in the price lists manufacturer) makes it the cheapest alternative to purchase and per 4 year cost of ownership. Gasoline and diesel cars are subject to one-off registration taxes and relatively high annual taxes for vehicle ownership, amounting to several thousand euros. Compared to the petrol version of the VW Golf, private buyers who choose the VW ID.3 BEV save € 4,500 on acquisition and € 10,000 if the car is kept for 4 years. If buyers aren’t lucky enough to get the one-time bonus of € 4,000, before the available funds run out, the cost advantage still exists, albeit reduced.
Thus, for individual consumers, the cost benefit of purchasing a BEV is ensured through financial and tax incentives in place. But what about company cars? In 2020, 73% of all new electric passenger cars in the Netherlands were registered by companies compared to 27% by individuals. Businesses also benefit from various incentives if they opt for a BEV, including tax deductions for purchases.
In addition, employees who use their employer’s battery-powered electric company car for private purposes, which is considered a benefit in kind, benefit from a reduction in private income tax. In 2020, the added taxable income rate for BEVs was 8% for the first € 45,000 the purchase price of the vehicle, including value added tax and registration tax. Above this threshold, the taxable income rate was 22%.
[Read: How do you build a pet-friendly gadget? We asked experts and animal owners]
This higher rate also applied to all vehicles with emissions greater than 0 g CO2 per km. The figure below shows the impacts of these incentives for the 2020 tax year. annual taxable income greater than € 68,508 were charged an additional € 120 per month in income tax for their private use of a VW ID.3 BEV company car. In comparison, the additional monthly tax burden was significantly higher for VW petrol, diesel and PHEV models, ranging from € 340 to over € 400 per month. The effects are also notable for annual taxable income of less than € 68,508.
By focusing on costs, private and business consumers in the Netherlands have an interest in opting for a BEV. But is this reflected in the vehicle market? If we differentiate the adoption of electric vehicles by private new car registrations versus company registrations in 2020, the graph below reveals that 67% of individuals and 74% of companies are in favor of BEV in the first half of 2020, and 73% and 90%, respectively, in the second half. This is not surprising, given the government’s ambition and the policies adopted to boost zero-emission vehicles, i.e. BEVs and fuel cell electric vehicles.
New registrations of electric passenger cars have shown an increasing trend in 2020, as shown in the figure below. Registrations of new electric passenger cars, including BEVs and PHEVs, fell dramatically in January 2020 compared to December 2019, from 55% to 8% of all new passenger car registrations. This decrease can be explained by a strengthening of tax rates on the income of battery electric company cars for private use by employees, which fell from 4% to 8% on January 1, 2020. While others European countries recorded a high consumption of electric cars from January 2020 as CO tighter2 program the standards for new passenger cars set by the European Commission were put in place, this effect was canceled by the Dutch tax amendment. The global COVID-19 pandemic that began in March led to a slight drop in electric passenger car registrations from 17% in March to 14% in April and May.
The market recovered with continuously increasing shares of over 20% from August. This was likely made easier by the new buy-in bonus for private BEV purchases and rentals, although funds ran out within days. As at the end of December 2019, consumers also made sure to get a BEV in December 2020, as the additional taxable income rate for battery electric company cars for private use was increased by 4 percentage points to 12%, and the threshold has been lowered from € 45,000 to € 40,000 from January 2021. This results in a historic share of 72% (69% BEV and 3% PHEV) of new electric passenger car registrations in December 2020 and a sharp drop to 11% (3% BEV and 8% PHEV) in January 2021.
The Netherlands has led by example by implementing strong incentive policies for electric vehicles, especially electric vehicles, while creating disincentives in the form of significantly higher taxes on gasoline and especially diesel cars. These activities are accompanied by additional actions.
The Netherlands have the higher number of public charging stations for electric vehicles and per 100 km2 in Europe. In addition, some Dutch cities and municipal administrations such as Amsterdam, Rotterdam and The Hague provide free public charging stations on request individuals and businesses where charging at home and at the workplace is not possible. In addition, cities such as Amsterdam aim for all traffic throughout the city to be emission free by 2030. The government is also aiming for a minimum of 30 cities to implement zero emission zones for urban logistics by 2025. Beyond policies, consumers can also choose from a growing number of vehicle models for sale. In 2020, if only for BEVs, more 60 different models have been newly registered in the countryside.
The Netherlands is proof that national and local policies play a key role in electrification, and in particular the transition to BEVs. As a result, the country is on track to meet its 2030 target of selling only new zero-emission cars.
This item was originally published at Theicct by Sandra Wappelhorst and has been republished under Creative Commons.
Do EVs Excite Your Electrons? Do e-bikes turn your wheels? Do Self-Driving Cars All Charge You?
Then you need the weekly SHIFT newsletter in your life. Click here to register.