04.11.2025
On October 31, Energy Club held an online discussion on the topical issue “EV Incentives: Extension or Cancellation?”. The electric vehicle market in Ukraine has found itself in a state of turbulence due to an amendment to the State Budget that extends the preferential import of electric cars until 2027. The head of the tax committee, Danylo Hetmantsev, refuted this information, calling the amendment temporary.
The opinions of Ukrainians are divided. The parties’ arguments are also polar:
— “Against”: A potential loss for the budget and the defense sector of up to UAH 30 billion;
— “For”: The development of electromobility, charging infrastructure, and a reduction in dependence on imported petroleum products.
The discussion participants – lawyers, MPs, energy experts, analysts, and business representatives – discussed the legal status of the issue, the economic consequences, and the future of the market. The meeting was moderated by Artem Martyniuk, vice president of Energy Club and Acting Director General of Ukrainian Distribution Networks JSC (August 2023 – September 2025).
Oleksii Hnatenko, Partner, Dispute Resolution Practice at Juscutum, emphasized the principle of tax legislation stability:
“If this incentive is canceled now, it will violate the norms of tax legislation, specifically Article 4 of the Tax Code of Ukraine, according to which changes must be introduced no later than six months before the start of a new budget period,” he noted. “From the standpoint of legislative mechanics, it would be correct either to introduce these changes earlier, before July 1, and inform businesses, or to extend this incentive.” According to the lawyer’s calculations, the cost of the issue for the State Budget is about UAH 10 billion per year.
Anton Zaderygolova, Partner, Tax and Private Clients Practices at AVELLUM, said: “Let’s also not forget the general principle of legal certainty. The habit of adopting changes to the Tax Code at the last minute, in violation of the principle of stability, does not add points to the conditional score of legal certainty in Ukraine. The budget committee did not support the proposed amendment that was adopted in the first reading. The decision on the fate of the incentive is not yet final and will be decided during the preparation of the State Budget Law for the second reading.”
Serhii Nahorniak, Member of Parliament of Ukraine, Head of the Subcommittee on Energy Saving and Energy Efficiency of the Verkhovna Rada Committee on Energy, Housing, and Utilities, reported that parliamentarians generally support the decision that it would be good to extend the incentive for the next year, 2026, but the Ministry of Finance is concerned about filling the budget deficit. The reasons for extending the incentive are significant: energy independence (using domestically produced electricity for charging electric cars, rather than imported fuel) and environmental friendliness. The only drawback is that the vast majority of cars today are imported from China.
Serhii Kuiun, Director of A-95 Consulting Group and energy expert, provided harsh arguments against extending the incentive:
Critical fiscal losses: For each car, the state “forgives” the buyer UAH 400,000 (VAT, import duty, excise tax). In total, this amounts to UAH 32 billion in incentives per year.
Total losses: Over two war years (2024–2025), about UAH 60 billion has been thrown away for electric vehicles (including electricity subsidies and losses from fuel excise). This is absurd in a country at war.
Security risks (China): The import of Chinese cars, which the US and Israel are restricting, creates a threat of dependence on Chinese technologies.
Economic feasibility: Electric cars have already become significantly cheaper, and even after the incentives are canceled, they will be cheaper than ICE cars. Canceling the incentives is not the end of electric vehicles.
Legal aspect: The law provides for the termination of the incentive. The very attempt to postpone it now is a violation.
Dmytro Lyoushkin, Director of Prime Group of Companies, expanded on the social aspect: “If the incentive is canceled now, it will be a social explosion, as the lack of benefits will hit the middle class. Electric cars are, for example, taxis, a huge segment of our fellow citizens who earn money with them to support their families.” He emphasized that UAH 10 billion ($250 million) is not a critical amount for the budget amidst international aid, whereas the social consequences could be severe.
The director of Prime Group of Companies added that the issue of Chinese cars is within the purview of the Security Service of Ukraine. Besides, the largest share of electric vehicles in Ukraine consists of used Teslas from America, not the Chinese auto industry.
Vitalii Tsado, Director of ЕМА Drive LLC, refuted the argument about subsidies: “Nobody is subsidizing anyone here. Why does electricity cost 2.16 at night? Because the system needs to be balanced. Everyone benefits from the presence of electric vehicles – electricity producers, DSOs, and electric car owners. If we want a stable tax revenue, we must develop the power grid.”
A representative of the scientific community, Serhii Sapegin, Director of the Psychea Scientific and Technical Center, presented a detailed analysis of the incentive’s impact on various market players:
Importers and dealers of ICE cars: Risk losing market share but can adapt.
Fuel traders: Electrification of transport is a strategic threat.
Fiscal authorities: Lose VAT and import duties but receive indirect revenues (VAT on charging, services, new jobs).
Energy companies: Benefit from increased demand for electricity, especially at night.
He also emphasized the strategic potential: “80,000 EVs represent 2.5 GWh of imported energy storage. Electric vehicles can help balance regional loads.” Thus, in reality, the only ones who lose from adopting the incentive are the fuel traders. The risks from extending the incentive for most sectors are minimal. The scientist’s conclusion is that an optimal model is needed to combine decarbonization, energy security, and fiscal stability. The recommendation is to extend the incentives with a phased introduction of compensators to combine decarbonization, energy security, and fiscal stability.
Serhii Kuiun, Director of A-95 Consulting Group, added: “The USA, England, and Israel have banned the import of Chinese cars. Listening devices were found in the Chinese electric car of the Australian Prime Minister. A country at war is sponsoring the partners of our enemies.” When making the final decision on whether to extend or cancel the incentive, specifics and figures regarding compensators for fiscal losses are needed, believes Serhii Kuiun, who also raised the question: who will pay tens of billions for the modernization of outdated grids if tariffs are subsidized? European politicians are slowing down the transition to electric cars due to grid problems (the example of Austria), so inadequate incentives must be canceled, following the European approach, summarized the director of A-95 Consulting Group.
Artem Martyniuk thanked the discussion participants for their active positions and expressed hope that the information received will be taken into account and the right conclusions drawn when the decision is made in the Verkhovna Rada.
