Italy details audacious plan on clean car subsidies

As of March, the Italian government is activating a new subsidy scheme aimed at decarbonizing its polluting old car fleet. The plan entails substantial aid for lower incomes and incentives for hybridized vehicles and charging infrastructure. Almost one billion euros is put aside for the national clean sweep.

The 950 million euro plan was unveiled at the beginning of the year, but Italy’s Business and Made in Italy Minister Adolfo Urso has now presented it in closer detail. It is stacked upon three pillars: scrapping polluting cars, assisting low-income households with upgrading their vehicle, and supporting production in Italy.

Beyond battery power

The country, burdened with one of the oldest car fleets in Europe, envisioned a subsidy scheme mirroring France, where carbon footprint is the main criterion. But its leaders have now chosen a different approach. Italy is home to at least 11 million Euro 3 cars or lower-class vehicles. With roughly 4%, its electric car share is among the EU’s lowest.

The adopted new funding must help change that, though it is not exclusively allocated to new and privately owned cars. It comprises 793 million euros for passenger vehicles, 35 million for mopeds and motorbikes, 53 million for light commercial vehicles, 20 million for used cars, and 50 million for long-term rental programs.

What looks like a huge incentive to boost battery-powered mobility is, in detail, a much more nuanced picture. Only 240 million euros flow to purely electric vehicles, and a much more significant portion, 403 million euros, will support full hybrids, mild hybrids, and combustion engines with CO2 emissions between 61 and 135 g/km. For plug-in hybrids, 150 million euros are set aside. Seemingly, Italy isn’t ready for a shock scenario but seeks to modernize its polluting and outdated fleet with a transitional scheme.

Grants up to 13 750 euros

The subsidy will vary depending on the applicant’s income and the scrapped combustion engine emissions standard. The maximum support for electric cars is 13,750 euros for individuals with an annual income of less than 30,000 euros, scrapping a combustion engine within Euro 0 to Euro 2 emission standards.

New electric cars or economical combustion engines are subsidized up to a list price of 35,000 euros net or 42,700 euros gross, except for plug-in hybrids, which are eligible for up to 45,000 euros net or 54,900 euros gross. An eco-bonus is also available for BEVs and PHEVs without scrapping, providing up to 7,500 euros. The plan is set to take effect in March this year.

Is Italy taking a stake in Stellantis?

Minister Urso launched the plan not without lashing back at Stellantis CEO Carlo Tavares, who had been criticizing the country’s weak incentives after Prime Minister Georgia Meloni called upon him for not sufficiently supporting the country’s automotive production.

Mr. Urso emphasized the government’s commitment to restoring Italian production to one million units annually, possibly attracting a second car manufacturer. He mentioned that incentives are only a part of the solution and have, until now, often benefited cars produced in foreign factories, including those of Stellantis.

Urso also invited the Stellantis boss to start possible talks about his country taking a stake in the automaker. He referred to the French interests, with the Paris administration raising their voting rights from 6.1% to 9.6% at the end of January this year.

“If Tavares maintains that Italy needs to do the same as France, which has boosted its active investment in Stellantis, they can ask. We can discuss it together,” Urso concluded. Fiat is Stellantis’ biggest-selling brand worldwide.

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