Italy Automotive Electric Vehicles

Total new car sales in the Italian market were 1,316,702 units in 2022, a reduction of about 141,000 units compared to 2021.  Several factors, including geopolitical uncertainties and high inflation did not ease the sales of new vehicles.  The breakdown of car sales by fuel was mild and full hybrid vehicles (34.2%); petrol (27.8%); diesel (19.6%); gas, mostly LPG (9.8%); electric, i.e., pure electric and plug-in (8.6%); the hydrogen share was negligible.

Electric and hybrid vehicles represent an important part of the Italian market, albeit at a reduced pace compared to the last few years.

The share of pure electric and plug-in vehicles in the Italian market, 8.6% in 2022 (9.3% in 2021), is comparable to Spain (9.6%), but far from France (21.6%), the UK (22.8%) and Germany (31.4%).  In numbers this means over 113,000 vehicles sold in Italy (a little over 49,000 pure electric - and a little over 64,000 plug-in).  The electric vehicles market seems to be in a consolidating phase, which could receive a new boost from improved charging infrastructures and additional incentives.  Starting from 2035, the European Union will only allow sales of zero emission vehicles, so a larger network of charging infrastructures will be fundamental.

Market experts highlighted two major reasons that prevent the market from expanding further:

• The first one was the inadequate infrastructural network. In September 2022, Italy ranked only 15th in Europe (with 6.7 charging outlets every 100 kilometers, compared to a European average of 8.9 every 100 kilometers).  A recent plan at the national level is expected to expand the charging network by adding, by 2025, over 21,000 outlets in both urban areas and long-distance roads.  The plan will be funded by using € 713 million, approximately US$800 million, funds from the Italian National Resilience and Recovery Plan, NRRP.  The infrastructure network is less developed in Southern Italy and in the islands, also because the local market is smaller.  Although Southern Italy and the islands need the development of a charging infrastructure to attract owners of electric vehicles, most of the new infrastructures will be developed in six regions (like U.S. States) in Northern and Central Italy: Piedmont, Liguria, Lombardy, Veneto, Tuscany, and Latium.  Apulia and Sicily are the only two regions (in the South and in the islands) that will see an increase in the charging network.
• The second issue is that the Italian national incentives scheme (based on a scrappage scheme mandating the replacement of older and more polluting vehicles), which should support the sales of electric vehicles, was not enough to boost sales, due to the high prices of electric vehicles and the difficulties for the low-income population to avail of these incentives to shift from endothermic to electrified vehicles.  Companies were not allowed to use incentives for most of the year.  Consequently, some of the incentives devoted to support the sales of electric vehicles, both pure electric and plug-ins, remained unused in 2022.

Since January 10, 2023, there is another round of incentives, which should help to increase the market share of electric vehicles.  As in the past, some of these incentives will be allotted to purchase less polluting endothermic vehicles too.  Vehicles are in fact rated based on their polluting values, measured in CO2 grams per kilometer: 0-20 CO2 grams per kilometer, basically meaning pure electric; 20-60, basically meaning plug-in hybrid; 61-135, basically meaning full hybrid, mild-hybrid and endothermic.  Expectations are for a massive request for incentives to target full hybrid, mild-hybrid, and endothermic vehicles.  Funds worth €650 million (approximately US$727 million) will be available in 2023: most of them, €575 million, will be set aside for cars; other funds will be allotted to electric but also partially to endothermic moped and motorcycles, to electric light commercial vehicles, and to domestic charging infrastructures.

Sector associations such as Unrae - the association of the foreign manufacturers in Italy - and market experts both recommend that any incentive plan (which should have more funds and spin over many years – at least until 2026) should be specifically framed to help low-income buyers to get access to electrified vehicles, as these consumers often use the oldest and more polluting endothermic vehicles.  A model such as the future Tesla Model 2, expected to be sold at around $25,000, would probably be ideal to expand the sales of electric models.  These experts also suggest that the development of charging infrastructures should include fueling hydrogen-powered vehicles - currently very scarce in Italy - and that the development of a new tax structure should link tax incentives to CO2 emissions for hydrogen-powered vehicles to support companies purchases.

Finally, they believe that the Italian automotive industry supply chain needs an in-depth restructuring.  This to allow Italy to retain its strength in this sector and be competitive at the European level.

Stellantis, the group formed by the French PSA and the Italian American FCA, leads the low emissions vehicles sales with its models, e.g., Jeep Compass 4xe, Renegade 4xe and the electric 500, which is the leader among the ‘pure electric’ models.  The company’s CEO, Carlos Tavarez, recently declared that the most important challenge for automakers today is to sell electric cars that are more affordable to the average consumers.

To learn about the trends in the market, interested U.S. companies may also refer to several sources, e.g. Anfia, the Italian Association of the automotive sector, Ancma, the Italian association of the motorcycle sector, Unrae, the Italian association of the foreign car manufacturers, Motus E, the Italian association of companies, research centers, consultants involved in the transition to electric mobility, Quattroruote, the main Italian magazine of the automotive sector.

Opportunities may exist for U.S. firms in the charging sector related to electrical vehicles as well in sales of electric vehicles (e.g., cars and motorcycles.).  U.S. entrepreneurs interested in connecting with Italian industry players and seeking representation and information on how the U.S. Commercial Service can assist them should reach out to: andrea.rosa@trade.gov