Major Developments in 2023

New policies, legislation, incentives, funding and taxation The number of Battery Electric Vehicles (BEVs) sold in 2023 showed an increase of about 35% compared to 2022. In 2022, Italy experienced a remarkable slowdown in the number of new Electric Vehicles (EVs) registered which was approximately 15% less than in 2021. However, the number of new Plug-in Hybrid Electric Vehicles (PHEVs) roughly maintained the same number of sales in both 2022 and 2023.

The new Energy and Climate Plan (Piano Energia and Clima – PNIEC) released in June 2023 by the Ministry of the Environment, set a new target of 6.6 million BEVs sold by 2030. Changes in the PNIEC want to show the “Italian way” for decarbonisation of transport in the new international geo-political scenario.

The registration rate of new electric cars (BEV + PHEV) at the end of 2023 was about 9% of the total new registrations. However, this is not enough to meet the PNIEC targets in 2030. A strong acceleration will be addressed towards electric and renewables, specifically, the production of renewable gases such as biomethane and hydrogen, and other biofuels such as hydrotreated vegetable oil (HVO).

Italy is pushing towards a progressive reduction of traditional cars (ICE) compensated by a slow increase of passenger cars fueled by alternative fuels (i.e., methane, LPG, FCEV). This will be followed by a progressive reduction of the existing fleet through the increase of shared mobility methods (i.e., car sharing, bike sharing).

In 2023, the cost of raw materials increased causing a chain effect to the overall price of BEVs, having a negative impact on their affordability. An increase in energy prices has been also observed at public recharging points. A recent investigation showed that EV drivers are environmentally conscious which, together with incentives, are considered key factors when purchasing an EV. Domestic charging is found to be the most popular mode, as there is concern about the capillarity of the charging infrastructure across Italy, as well as the high price associated with charging stations.

An increase in the availability of EVs has been observed from 2022 to 2023, mainly focused on city and luxury cars. On the other hand, the PHEV offer remains stable but with a shift from medium-sized cars towards larger-sized cars. In addition, a shortage and availability of raw materials has had a negative impact with an increase of 5% HEV TCP Annual Report 2024 ITALY 147 to 10% in sale prices of BEVs. The launch of new BEV models experienced a price increase of about 24%. Overall, there was an improvement in vehicle performance, but this came with a decrease in the affordability of vehicles.

Overall, EVs launched onto the Italian market within the last three years showed a net increase of +20%, accompanied by a reduction of 35% in the charging time (min/100 km).

During 2023, several incentives and legislations issued in the previous year 2022 stayed in force to increase the uptake of alternatively fueled vehicles and charging infrastructure. The legislation includes: • Ownership tax benefits • Company tax benefits • Incentive to purchase a passenger vehicle (including electric vehicles and it is valid until 12/07/2025, ECOBONUS) • Incentive to purchase motorcycles and mopeds (valid until 12/07/2025, ECOBONUS) • Incentive to purchase commercial vehicles (valid until 12/07/2025, ECOBONUS)

The incentive to purchase a recharging point for domestic use (ECOBONUS), a financial incentive of up to 80% is issued when purchasing a domestic recharging point (including the installation) and was found to have little effect on influencing EV uptake. The incentive has a price cap of €1,500 but, it can rise to €8,000 for installations within common areas of residential buildings.

This incentive is also issued based on the charging power:

a) AC charging infrastructures with a power between 7.4kW and 22 kW can benefit of an incentive of €2,500 per device for a Wallbox with only one charging point, whereas an incentive of €8,000 is issued for charging columns equipped with two charging points.

b) DC charging infrastructures with a power up to 50 kW can benefit from an incentive of €1,000. Charging infrastructures (per column) with power between 50 kW and 100 kW can benefit from an incentive of up to €50,000, whereas for infrastructures (per column) with power larger than 100 kW, the incentive rises to €75,0005.

The ECOBONUS did not show the expected improvement in the sales of EVs.

The reduced incentives available combined with stark range differences between EVs and internal combustion engine vehicles (ICEVs) resulted in a slower uptake of EVs on the market. Therefore, starting from March 2024, newly remodeled incentives have been allocated for the purchase of EVs10. The financial resources allocated by the Ministry of Enterprise and the Made in Italy programme for this incentive is about one billion euros (€610 million in addition to the €320 million leftover from the ECOBONUS) to purchase models of BEVs with CO2 emissions ranging between 0 and 135 g/km. The scheme to distribute new car incentives for the year 2024 is strictly linked to the Equivalent Financial Situation Indicator (ISEE) of each potential HEV TCP Annual Report 2024 ITALY 148 customer.

Incentives falling in the CO2 emission class between 0 and 20 g/km, set different models of cars to scrap and their homologation class according to the individual ISEE value. Large incentives are addressed to drivers with ISEE of less than €30,000 with the condition to scrap a car within class Euro 1 or 2. These individuals will get about €13,750 (ECOBONUS) to purchase a new electric car whose price cannot overcome €30,000 + VAT, which is about €42,700 in total

Outlook

Under public charging infrastructure, highway charging represents the most urgent objective, together with the creation of a capillary network at a national level. Alternative Fuels Infrastructure Regulation (AFIR) targets are mainly addressed towards motorways and exurban roads along the Trans-European Transport Network (TEN-T).

The PNIEC released in June 2023 by the Ministry of the Environment, set a new target of 6.6 million BEVs to be sold by 2030.

Forecasts from three automotive market scenarios have been reported in the annual “Smart Mobility Report” published by the Italian Polytechnic Institute in Milan in October 20233. Results from scenarios of the distribution of passenger cars are summarised as follows:

• “Business-As-Usual” (BAU) scenario: this scenario foresees an adoption of almost 3.8 million of electric vehicles by 2030.
• “Policy Driven” (PD) scenario: in this scenario, the number of electric vehicles is foreseen to reach 6,6 million by 2030.
• “Fully Decarbonised” (FD) scenario: in this scenario the number of electric vehicles is foreseen to reach about 7.8 million by 2030.

All three scenarios forecasted an increasing penetration of electric vehicles, while the number of traditional ICE cars should see a gradual decrease.