Proposed low-income EV subsidy draws criticism over costs and eligibility

A proposed scrappage subsidy of up to 6,000 euros for low-income people buying an electric car has drawn extensive criticism during a consultation process, Yle reports. The application period is scheduled to begin at the end of 2027.

The subsidy would be available when a petrol or diesel car at least 10 years old is scrapped. It could be used to buy or lease a new or used electric car, and could cover no more than 70 per cent of the vehicle’s price.

The proposed income limit is between 25,000 and 26,000 euros a year, or just over 2,000 euros a month. The scheme is expected to cost between 112 million and 114 million euros. The European Union would cover 75 per cent of the cost and Finland the remainder.

Concerns over used electric cars

The Finnish Taxpayers’ Association said allowing the subsidy to be used for a used electric car could undermine efforts to renew the vehicle fleet and increase the number of electric cars. Economist Janne Kalluinen said trading used cars does not increase the total number of electric cars.

The association also said the income-based scheme would not take recipients’ wealth into account. This could allow a financially well-off household with temporarily low income to qualify for the subsidy.

Kalluinen gave the example of a person who retires after earning 4,000 euros a month and then receives a pension of about 2,000 euros. That person could fall below the proposed income limit despite not being in a vulnerable position, he said.

Fears that prices could rise

WWF Finland supports the subsidy in principle but warned that it could push up electric car prices. This could reduce the number of potential buyers and weaken the scheme’s aim of increasing demand for electric cars.

WWF Finland programme director Bernt Nordman said car dealers and other providers could raise prices by an amount similar to the public subsidy, potentially increasing prices across the electric car market.

The Finnish Taxpayers’ Association said some of the benefit from higher prices could indirectly go to existing electric car owners, who are typically not low-income people.

Calls to include bicycles and public transport

Bioenergia, an advocacy organisation for the bioenergy sector, said the subsidy discriminates against vehicles using biomethane and other renewable fuels because it can only be used for an electric car. The organisation described the measure as an ineffective climate policy and irresponsible use of public money under current conditions.

Several other organisations also criticised the restriction. Cities including Tampere, Turku and Vantaa want the subsidy to be extended to electric bicycles and, in part, public transport tickets. The Federation of Finnish Enterprises, the Finnish Environment Institute and Energy Industries also support allowing the subsidy to be used for electric bicycles.

The Finnish Environment Institute said electric bicycles have significant potential to replace journeys made by car.

The Finnish Association for Nature Conservation, the Central Organisation of the Finnish Motor Trade and Industry, and the Consumers’ Union of Finland expressed support for helping low-income people buy cars through the scrappage subsidy.