Electric vehicle regulation and law in Ukraine

Ukraine has an unexpectedly high ranking among the countries promoting the use of EVs. The main reason is the rapid growth in the share of EVs among new cars bought by Ukrainians over the last few years, along with the recent introduction of tax exemptions on EV imports and sales. Further development of the charging infrastructure and the global decrease in battery prices may result in an EV miracle for Ukraine, reducing its overall dependency on oil.

1. What EVs have been deployed in your jurisdiction to date?

According to the statistics of the Ministry of Interior of Ukraine, 1,602 EVs were registered in Ukraine in 2016. However, EV registrations reached 682 in the first quarter of 2017 alone, and unofficial market data indicates that around 2,700 EVs were registered in 2017. That is approximately 4% of the total car sales.

The market leader is the Nissan Leaf, with a share of about 78%. The remainder is shared between the Ford Focus, Tesla Model S, BMW i3 and Renault Fluence.

Used imports account for around 85% of the EV market. This is not surprising, considering the high price of EVs compared to their oil-burning alternatives and the relatively low buying power of Ukrainians. However, the used cars trend also demonstrates very high interest in the EV segment, which doubtless will continue to grow following the global EV price decrease and new tax incentives for 2018.

Apart from full EVs, there is also high interest in hybrids – representing a compromise between the technology and the current lack of charging infrastructure. The most popular cars in this segment are the Toyota RAV-4 Hybrid, Chevrolet Volt and Kia Niro, not counting the National Police’s fleet of Toyota Prius and Mitsubishi Outlander PHEVs.

Public transport plays a major role in promoting EV culture in Ukraine. Historically, electricity-powered trolley buses and trams were among the most used means of public transportation in the bigger cities. Today, these vehicles are manufactured by Elektrontrans, a Ukrainian-German JV. Since 2016, Elektrontrans has also focused on the manufacturing of battery-equipped electric buses.

2. Is there any specific legislation for/regulation of EVs in your jurisdiction?

Ukraine does not have separate legislation dedicated to the regulation of EVs (e.g. road and electrical safety-related regulations, specific registration requirements, etc.). Tax and customs incentives described below are part of general legislation – the Tax Code of Ukraine and the Law on Customs Tariff.

3. What measures promote EVs in your jurisdiction?

Use of EVs in Ukraine is motivated by tax and customs payments exemptions, including:

  • From 1 January 2016, vehicles equipped solely with an electric motor are exempt from import customs duty (8%/10% 1 Preferential rate, applies for instance to imports from WTO countries / full rate. ) 2 Law No. 822-VIII dated 25 November 2015. .
  • From 1 January 2016, exemption from import surcharge (5%) is granted to EVs equipped solely with electric motors. 3 Law No. 912-VIII dated 24 December 2015
  • From 1 January 2018 until 31 December 2018, imported and domestically-produced EVs will also be exempt from import/sales VAT (20%) and excise duty (EUR 109). 4 Law No. 2245-VII dated 7 December 2017.

This means that until 31 December 2018, the only payment due on the import or domestic sales of EVs is a fee to the pension fund (3-5%). It is also likely that the temporary exemptions mentioned above will be extended after 2019.

However, apart from tax exemptions, the state has not yet developed other EV promotion strategies, which could include subsidies, grants, loans or other types of support granted to consumers, manufacturers or infrastructure developers.

4. Who are the main entities (e.g. developers, government, System Operator) and what are their roles in the deployment of EVs in your jurisdiction?

The Ukrainian EV market is mainly influenced by the following public and private actors:

  • The Parliament (Verkhovna Rada of Ukraine) – plays a key role in the regulation of any emerging market. As noted above, tax incentives are simple but highly efficient drivers of the Ukrainian EV market.
  • The Ministry of Infrastructure of Ukraine – the highest governmental body that initiates and supports legislative developments facilitating the deployment of EVs in Ukraine. The Ministry has set a target to increase the share of EV sales to 15% of all car sales in Ukraine by 2020.
  • The Ministry of Ecology and Natural Resources – another top governmental body, whose responsibilities include greenhouse gas emissions trading under the terms of the Kyoto Protocol. Funds received were used to buy EVs and hybrids for the National Police.
  • Vehicle and battery importers and manufacturers – currently, only a relatively small number of electric buses are manufactured in Ukraine. VAT and excise tax exemptions may, however, change this situation. EV importers are the main players on the market so far – the vast majority of the EVs now sold in Ukraine are used imports.
  • Charging station developers – the number of charging stations in big cities is more or less sufficient for the comfortable use of EVs. However, that is not the case for small towns and rural areas. In general, there is a substantial demand for EV charging stations in Ukraine.
  • Specialised service stations operators – service stations specialising in EVs are rare in Ukraine. However, this type of service is highly driven by demand and, given the number of motor vehicle services in place, the industry is expected to boom with the wider deployment of EVs.
  • NGOs and industry bodies – including the Ukrainian Association of EVs Market Participants and the Ukrainian Motor Vehicle Manufacturers Association.

5. What are the main challenges to further deployment of EVs in your jurisdiction? How have EV developers sought to overcome these challenges to date?

From a customer’s perspective, obstacles to EV ownership include:

  • Price – EVs remain more expensive than combustion-driven vehicles. However, the price difference should be minimised by VAT and excise tax exemptions in 2018.
  • Absence of a unified nationwide charging infrastructure – even as the number of charging stations grows from year to year, especially in big cities like Kyiv, the absence of a unified nationwide charging infrastructure is an issue for prospective EV-purchasers. Some of the existing charging stations are private, designated for the use by employees of a certain company, and high-speed charging stations are rare. The vast majority of charging stations deployed are slow-speed, suitable only for overnight charging.
Tetiana Mylenka
Associate
Kyiv (CMS RRH)
Image of Volodymyr Kolvakh
Volodymyr Kolvakh
Senior Associate
Kyiv (CMS CMNO)