Fleet Financing

Polish subsidies make electric vehicles a cheaper alternative | Business | Economic and financial news from a German perspective | DW

More than 40,000 electric vehicles (EVs) have been registered in Poland since the start of the year, up 70% compared to the same period of 2021. Of this figure, sales of electric cars have increased by 140% and hybrids by 100%, according to the SAMAR Automotive Market Research Institute.

This is largely thanks to the roll-out in late 2021 of a government subsidy program, called My e-car, for drivers who choose to lease EVs, with monthly payments often lower than those for combustion engine vehicles.

Last November, the Polish National Fund for Environmental Protection and Water Management (NFOSiGW) allocated 500 million zlotys ($125 million, 115 million euros) for subsidies to customers buying electric vehicles. The program aims to reduce emissions of air pollutants by reducing the consumption of fossil fuels in transport, mainly through the co-financing of the purchase or rental of zero-emission vehicles.

It is part of a wider electromobility campaign which aims to have more than 600,000 electric cars on the roads of the EU member state by 2030. Currently, only one in 500 cars registered in the country is electric. In comparison, in Germany it is one in every 50 new cars.

ElectroMobility Poland – an initiative of four Polish electricity companies – wants to bring the country into the era of electromobility and plans to build the first domestic electric vehicle in 2023. Poland already has a car battery production industry flourishing electricity. There are also niche electric car producers, as well as an internationally renowned electric bus manufacturer.

After relaunching the iconic communist-era Syrena car, Polish automaker FSO offers the Vosco EV2 electric version

“My electric car” program

The “My e-car” subsidy program introduced in 2021 significantly reduces long-term rental payments under the operational leasing method – a fixed monthly payment whereby drivers get a ready-to-run car and only pay fuel.

The support is given in the form of subsidies for the purchase of zero-emission vehicles and subsidies for the charges specified in the rental contracts. Grants are only available to individual clients, but businesses, institutions and local governments will be able to apply in the future.

“The My e-car program is one of the turning points,” said Wojciech Drzewiecki, president of the automotive market research institute SAMAR. “Electric cars also have quite high residual values, which allows companies to prepare good offers with more attractive monthly payments,” he told DW.

“The offer becomes more complete and attractive, which changes mentalities,” added Drzewiecki.

Rises in fuel prices at filling stations resulting from the war in Ukraine have also meant that drivers look more favorably on electric vehicles.

Since the program was launched, leasing company Arvala has received more than 2,500 inquiries about subsidized vehicles and submitted 450 grant applications to Bank Ochrony Srodowiska (BOS), which supports the program and has so far granted 40 million zlotys under the leasing method.

According to a recent survey conducted by car leasing company Webfleet Solutions, more than 60% of Polish corporate car fleet operators are interested in purchasing electric vehicles in the next two to three years.

Elektrobus Urbino 12 Electric Solaris presented at a transport fair in Germany

Poland has a tradition of manufacturing battery-powered vehicles, producing electric buses like the Solaris Urbino 12 for several years

nuts and bolts

The program applies to electric vehicles with a price of up to 225,000 zlotys, or 211,000 zlotys net for people using the car in the so-called mixed method for business and private purposes. The subsidy is 18,750 zlotys – or 27,000 zlotys when the car is used for more than 15,000 km (9,300 miles) per year.

“Experience so far shows that if there were no subsidies, the sale of battery-powered vehicles would remain at a much lower level,” Jakub Farys of the Polish Association of the Automotive Industry told DW. As Poland is still in the “initial stage of popularizing electric vehicles”, subsidies are needed, but could lead to a situation where their popularity will be so great that they will no longer be needed, he added.

In 2021, the average price of a new electric car before taxes was close to 200,000 zlotys in Poland. A thermal vehicle costs drivers around 135,000 zlotys on average.

“The biggest savings are related to both fuel costs and insurance,” Maciej Mazur, managing director of PSPA, told DW.

Market limits

When it comes to renting an electric vehicle in Poland, the leasing company Carsmile has calculated that the monthly payments for a battery-powered Dacia Spring, for example, are more than 100 zlotys cheaper than for the gasoline-powered Dacia Sandero. An all-electric Peugeot e208 is even 228 zlotys cheaper than its combustion equivalent. In the premium car segment, the differences in monthly leasing rates are also significant.

Automotive experts admit the success of the government-sponsored program has exceeded expectations, adding, however, that it is running into capacity issues. A major problem lies in the processing times for grant applications, which are getting longer and longer.

Access to charging stations is another aspect limiting the expansion of the electric vehicle market. Mainly using public fast chargers still makes electric vehicles more expensive than combustion cars or hybrids.

Apart from that, common issues such as range anxiety and charging times prevent wider adoption of electric vehicles in Poland as elsewhere in the world.

Edited by: Uwe Hessler