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Key Insights
Italy has approved nearly 600 million euros in new subsidies to boost electric vehicle sales, addressing the nation's lagging adoption rates.
The program offers up to 10,000 euros for individuals and 20,000 euros for small firms, covering up to 30% of the EV purchase price.
Eligibility requires scrapping an older Euro 5 emission class internal combustion vehicle and is restricted to buyers in larger urban areas.
The initiative aims to accelerate Italy's EV transition and improve air quality, aligning with broader EU decarbonization goals despite market challenges.
ROME – Italy’s environment and energy ministry announced on Friday the approval of new subsidies totaling nearly 600 million euros ($698 million) aimed at stimulating the purchase of electric vehicles, as the nation continues to grapple with sluggish EV sales. This significant financial injection, sourced from the European Union’s post-COVID recovery funds, seeks to accelerate the transition to cleaner transportation and improve air quality in urban centers.
The new scheme offers substantial incentives, providing up to 10,000 euros for individual buyers and up to 20,000 euros for small businesses. These subsidies are designed to cover a maximum of 30% of the total purchase price for new electric cars or commercial vehicles. To qualify for the program, beneficiaries must be located in larger urban areas and are required to scrap an internal combustion vehicle manufactured in 2015 or earlier, specifically those up to the Euro 5 emission class. This dual approach aims to not only promote new EV sales but also to remove older, more polluting vehicles from circulation.
The initiative comes as EV sales across Europe face considerable headwinds, primarily due to high vehicle prices and an underdeveloped charging infrastructure. In Italy, the challenge is particularly acute; battery electric vehicles constituted only 6% of new car sales in June, a stark contrast to the European Union average of over 15%. This disparity highlights the need for targeted interventions to align Italy with the broader EU objective of phasing out combustion engine cars to meet ambitious carbon emission reduction goals.
The European Union is currently pushing forward with regulations designed to ban the sale of new petrol and diesel cars from 2035. However, this mandate is under increasing scrutiny, with the bloc scheduled to review the ban next year. Pressure from the automotive industry and several national governments suggests a potential re-evaluation of the timeline, reflecting concerns about the pace of the transition and market readiness. Italy's new subsidy program represents a proactive step to address its domestic market challenges, potentially serving as a model for other member states struggling with similar adoption rates and infrastructure deficits.