Fix of flawed EV law is long overdue

ALBAY 2nd District Rep. Jose Ma. Clemente “Joey” Salceda this week filed a measure that would make several crucial amendments to the Electric Vehicle Industry Development Act (Evida). These repairs are badly needed and long overdue, as the original Evida Law (Republic Act 11697) has served more as an example of how not to craft and implement important legislation than it has as an actual catalyst for electric vehicle (EV) development and adoption.

Salceda’s House Bill (HB) 9573 would reconfigure the tax and customs duty framework for EVs and, most importantly, would correct the biggest flaw in RA 11697 by redefining EVs to include two- and three-wheeled vehicles, which were left out of the Evida Law.

Salceda noted that 60 percent of electric vehicles in the Philippines are two-wheeled, meaning that “the vast majority of electric vehicles do not benefit from the tax incentives granted under the law,” a situation he described as “inequitable.”

He added, “Encouraging electric cars while locking out electric motorcycles does not address congestion issues but merely substitutes petroleum-fueled cars for their space on the road.”

In addition to including two-wheeled EVs, HB 9573 would clarify some of the tax and tariff provisions of RA 11697 by specifying a zero-percent duty on the completely built EVs until 2029. It also expands the original law’s incentives for charging stations, which were exempted from tariff duties for a period of eight years, to include charging system components along with completely built units.

Other non-fiscal perks of RA 11697 are retained in HB 9573, including discounts on the motor vehicle user’s charge, vehicle registration, and inspection fee for eight years for EVs and hybrid EVs; exemption from the mandatory unified vehicular volume reduction program, or number-coding scheme; preferential processing of vehicle registrations or renewals; and applications and renewals for franchises to operate public utility vehicles for operators that are exclusively utilizing EVs.

The apparent intent of RA 11697 to encourage wider adoption of EVs and the development of a domestic EV manufacturing industry is certainly worthwhile and progressive, but the law — which was never signed by former president Duterte but simply lapsed into effectivity on April 15, 2022, a month before the national elections — has in no way accomplished that. While even Representative Salceda noted that EV sales have substantially increased and attributed that to the Evida Law, it seems he was merely being unnecessarily gracious. A report in mid-2023 by the Electric Vehicle Association of the Philippines (EVAP) revealed that the country is seriously falling behind its EV adoption goals.

According to the EVAP data at that time, EV auto sales accounted for only 2.4 percent of total industry volume, significantly behind the pace needed to reach the goal of 15 percent by 2030. Electric motorcycles and buses were performing even worse; motorcycles accounted for a mere 0.06 of total volume, against a target of 15 percent by 2030, and buses only made up 0.76 percent against a target of 20 percent by 2030. Likewise, the aim to have 10,000 charging stations by 2025 seems completely impossible; EVAP reported that 317 chargers (along with 21 battery-swapping stations) had been added in the previous year, but that only brought the total to 900 nationwide.

Government policymakers cannot expect to reach even these modest targets with a measure that took nearly a year to work its way through the legislative process, then was passed in haste in a fundamentally flawed form in the chaotic period leading up to a national election, and then lapsed into law without the badly needed further review. To the credit of some, the problem was recognized almost immediately; Sen. Imee Marcos filed a bill similar to Salceda’s in May 2022, barely two weeks after RA 11697 officially took effect, but it has lain dormant ever since.

We certainly hope that Congress can tear itself away from the unnecessary distraction of the Charter change initiative to give HB 9573 the priority it deserves. It takes the correct approach to encourage EVs by focusing primarily on encouraging the growth of the market for them, which will, in turn, encourage the growth of the domestic industry.