The government will give gifts to wealthy people

Pandemic lovers have devised a new way to increase public debt even further. The rich will be paid extra for the purchase of exclusively expensive cars. A grant of 2,250 to 4,500 euros from the Latvian government will be paid for each car purchased. A free gift.

The formal reason why wealthy people are being offered to change their car or fleet is to fight climate change. Such a policy is, of course, not in line with the idea of ​​sustainability. Every machine that is scrapped creates a lot of waste. However, this argument is not taken into account.

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In the Latvian car fleet, these exclusively expensive electric cars make up only 0.2% of the total Latvian car fleet. And a large part is registered to companies. In the previous programming period of EU funds, they were paid for the purchase of electric cars. In addition, paid a lot. In 2014, 174 electric cars with the co-financing of the climate change financial instrument in the amount of 85% were purchased in Latvia. Of course, with such a big gift, the price of an electric car was significantly lower than any internal combustion car. However, objectively their price difference is about double - an electric car is significantly more expensive because it requires not only many batteries, but also a more durable chassis due to its heavy weight. CSDD statistics show that after the giving these gifts to companies, the number of electric cars has not increased significantly in the following years, because even with the growth of the general welfare of the country, the performance of these cars is not so high as to encourage wealthy people to buy them. Currently, only 1,666 electric vehicles are registered in Latvia. These include a bunch of Soviet-era electric cars driving through business territories and a handful of electric buses.

Let's all pay for it together

Unlike in the previous programming period, support for the purchase of electric cars will no longer come from European funds, but from the Latvian state budget.

The electric car purchase scheme will be paid for by all taxpayers together.

Fans of micromobility are rightly outraged by this because the government will not give money for the more accessible electric scooters, electric mopeds and electric motorcycles. Only for cars.

The proportion of the gift will be lower than the previous time, but the recipient of the gift will receive additional compensation if they give up one car with an internal combustion engine for recycling. For now, this is just a government plan, but it is planned that from the beginning of 2022, a grant of 4,500 euros will be allocated for the purchase of one new electric car, and a grant of 2,250 euros for the purchase of a used electric car and a new plug-in hybrid car. Purchasing a used electric car is a big risk though, because the battery life is depleted over the years, so the performance of the car - the distance it can travel on a single charge - is significantly reduced.

Porsche Tycan is the most popular

People have already responded to the government's promise, as sales of electric cars have dropped significantly in July. The Automotive Association reports that only 15 new electric cars have been sold, as opposed to the 36 units sold in June. Currently, the leader among the new electric cars is Porsche Tycan with 4 units. For a rough idea of ​​the cost of such a car - its starting price in the most modest version is 107,450 euros. Of course, the 4,500 euros would be a significant support for the purchase of this car to the new owner.

Cheaper cars are also available on the market. For example, the discount price of Hyundai Ioniq last year was 36,990 euros (currently the discount price in the Latvian dealer warehouse exceeds 55,000 euros). The median gross wage in Latvia in 2020 was 893 euros. This is the average salary in the country, excluding extremely low and high salaries. It's the Latvian reality. This means that by deferring, for example, half of the salary earned to buy an electric car, to buy this Hyundai, the average person will have to save for 7 years, while they will be able to buy Porsche after 24 years. Or more precisely - will never be able to, even with state co-financing. However, there is an important nuance - the government gift will be given only for cars that are not more expensive than 50,000 euros. So the luxury car segment will not qualify for support. But in any case, only wealthy people and car lessees will be able to enjoy the government gift.

Contributing to the fight against global warming

The Cabinet of Ministers has reviewed the report of the Ministry of Environmental Protection and Regional Development and conceptually approved it as good enough. The duration of the support program could be 2 years - until December 31, 2023, or while funding is available. The total funding available is estimated at 10 million euros. This means that the Latvian car fleet could be enriched by 2222 new electric cars or a smaller number - if the population risks buying already used electric cars on the market. In this way, the government will mitigate global climate change caused by global warming. In order to ensure that the government's contribution to combating the dangers of warming is not misused, for example by buying first-generation electric cars that can barely move now, the gift will have to meet a number of conditions - a certain distance will have to be driven within a year. The machine will need to have a valid technical inspection and be registered in Latvia for at least four years. It is possible to get acquainted in full with the government's plan for gifting wealthy people here.

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