Economic policy to promote the use of electric vehicles in Costa Rica

Abstract

The policy of tax exemption on electric vehicles in Costa Rica, in effect since 2018, has been key to promoting their adoption, taking advantage of the country's renewable energy matrix and contributing to the reduction of greenhouse gas (GHG) emissions. This research analyzes the impact of this policy on the growth of the electric vehicle fleet and the decrease in emissions, identifying structural barriers that limit its expansion. Although the country is moving toward a second phase of accelerated development, it faces obstacles such as the high cost of electric vehicles, high commercialization margins, insufficient charging infrastructure, and consumer misinformation. These conditions threaten the fulfillment of the goal of 30% of the national fleet being electric by 2035. It presents conclusions and recommendations from both the supply and demand side; for instance, it is recommended to extend the term of the exemption policy to facilitate a natural market transition, complementing it with specific measures in the transportation and industrial sectors, such as incentives for electric buses, fleets, and electric boilers. In addition, it is suggested that the MEIC (Ministry of Economy, Industry, and Commerce) perform a comparative analysis of commercialization margins between electric and internal combustion vehicles, and that the MINAE (Ministry of Environment and Energy) update the emissions inventory of the energy sector to more accurately assess the impact of the policy.