Price reduction in electric and hybrid vehicles valued at more than $ 35,000 will be reflected in 2022

A greater supply of hybrid and electric vehicles in the country would be the main effect of the exoneration of the tax on special consumption (ICE) that applies to this segment with the entry into force of the Organic Law of Economic Development and Fiscal Sustainability.

The rule, which has been in force since November 29, details the tax exemption for these new technologies that each year reveal more attractive and comfortable models. In Ecuador, there are currently 11 options in electric units and 20 in hybrids of different brands, including BYD, Toyota, Kia and Hyundai. The catalog of prototypes is extensive.

Initially, brands were offering more sedans, but in the last year SUVs like the EV6 that Kia launched last week have been included.

For this segment, before the law, the ICE exemption was already contemplated for units up to $ 35,000, but now it is extended to more expensive ones that previously fit a table.

For example, according to article 82 of the Organic Law of Internal Tax RegimeVehicles up to $ 40,000 paid 8% of ICE, while those that exceeded $ 70,000 paid 32%. Now with the new law, this recording expires.

The variation in prices

For Genaro Baldeón, president of the Association of Automotive Companies of Ecuador (Aeade), the elimination of this tax burden opens the way for the market of new technologies in the country.

The leader explained that the reduction in prices for the consumer can be reflected from 2022 and this would go from $ 2,000 on average, but for vehicles with costs above $ 35,000. Currently, he mentioned, in those units that were below this amount, prices are adjusted and would not change in the coming months.

In contrast, a vehicle that cost $ 80,000 would have a reduction of at least $ 20,000 under the law. That is, it could reach about $ 62,000 in retail price.

An example is the brand’s EV6 model That. José Antonio Errazuriz, commercial director of the firm, explained that this prototype that will be available in 2022 will already enter with a price reduction thanks to the benefit. With the exemption, the EV6 will cost on average $ 51,000, that is, about $ 24,000 less than what it was going to cost in principle.

However, these types of models, which are more expensive, still do not have a strong weight in the catalog of brands on a national scale. In fact, Hyundai he has three hybrid specimens that are under $ 35,000. The Ionic, Sonata, and Kona range from $ 27,000 to $ 35,000.

“In the medium term it will be possible to bring more equipped models and higher in price unlike combustion vehicles,” said Baldeón, who added that as there is a broader market for new technologies, there will be the introduction of a greater offer that will push down prices also in cheaper units.

In fact, Kia pointed out that until 2022 it estimates to have in its portfolio five electric models and six hybrid models.

The market in the country

Currently, new technologies have a small share of the automotive market: less than 5% of all sales. Between January and October 2021, the automotive sector sold 98,352 units of which 3,270 corresponded to electric and hybrid cars.

Hybrids were the most widely acquired in that period, according to Aeade. For this segment there will be a considerable reduction in tax burden since, unlike the electric ones, they would stop paying a tax of the two that they currently pay. The hybrids paid, until before the law, the value added tax (VAT) and ICE.

Hybrid vehicle prices start at $ 18,000 and electric vehicles prices start at $ 8,600 like the Zhidou D1 model that is for two people.

The path to sustainable mobility

The massification of electric stationsProgressively, to make it viable to travel long distances in electric vehicles is one of the additional measures that the country requires to aim towards sustainable mobility, says Alfredo Samaniego, vice president of the Ecuadorian Association for Sustainable Electric Mobility (Asecmovel), who applaud that tributes have been removed for the more environmentally friendly units.

In the country they have installed 62 stations of this type in supermarkets, shopping centers, among others, in six cities. “To complement the benefits it is required additional measures in infrastructure electricity so that the step towards sustainable mobility is integral ”, he said.

With the use of these vehicles, for example, the customer can save up to 50% in the cost of gasoline consumption if he drives a hybrid unit and up to 70% in the case of electric ones. But all this will depend on the efficiency of the car. (I)