How the abolition of the automobile tax exemption for electric cars in Switzerland is changing the financial situation and what that means for the future.

How the abolition of the automobile tax exemption for electric cars in Switzerland is changing the financial situation and what that means for the future.

According to a report by www.heise.de, the Swiss government has decided to abolish the tax exemption for electric cars. From January 1, 2024, a tax of 4 percent will be due on the value of cars used to transport people or goods.

The reason for this step lies in the increased proportion of electric cars, which has led to a decline in revenue from automobile tax. In 2022, the tax loss amounted to around 78 million francs and in the current year the Federal Council expects a loss of around 100 million to 150 million francs. If the tax exemption were to be maintained, the tax losses could total up to 3 billion francs between 2024 and 2030.

From 2018 to 2022, the number of electric cars imported annually increased almost sixfold from around 8,000 to over 45,000. Around 30,400 electric cars were introduced in the first half of 2023, which corresponds to an increase of around 66 percent compared to the previous year. The share of electric cars in Switzerland's total imports reached around 23 percent in the first half of 2023.

The tax is levied on the import price, not the final sales price. The Federal Council assumes that price parity between fossil-fuelled automobiles and electric automobiles will be achieved by 2025.

The impact of this measure on the market and the financial sector is significant. The introduction of the tax on electric cars will make the purchase and import of such vehicles more expensive, which could have a negative impact on demand. In addition, the income from the tax could influence investments in the expansion of electromobility in Switzerland.

It is expected that manufacturers and retailers may make price adjustments to pass rising costs on to consumers. This could impact the competitiveness of electric cars compared to fossil fuel vehicles.

The adopted measure could also have an impact on Switzerland's long-term environmental and energy policy. The government must ensure that automobile tax revenues are invested in alternative energy and electric vehicle infrastructure to continue to support the transition to electric mobility.