Do electric cars have a future in Kosovo?
Legal infrastructure does not favor electric cars.
By Uran Haxha | June 21, 2024
Fidan Hallaqi, an entrepreneur in the gastronomy industry, started considering buying an electric car at the start of 2020, driven by his passion for exploring new technology. He looked online to find out where he could buy one. This sparked an idea that, despite many obstacles, would lead to him bringing Kosovo its first fleet of electric cars.
In 2020, the COVID-19 pandemic severely impacted many businesses, particularly those in the gastronomy and catering sector. As the manager of a hotel in Prishtina, Hallaqi began to consider starting a business that would be economically resilient in the event of another pandemic.
“We started with electric scooters, trying to operate in the capital where there are no regulations or support. We did everything ourselves, including developing the software, but it didn’t work out, so we decided to shift our focus to investing in taxis,” said Hallaqi about decisions he made in 2021. Today, he runs ETAXI, an electric taxi company.
The first challenge was figuring out how to order 20 electric cars and bring them to Kosovo. At a fair in Germany, Hallaqi approached the director responsible for fleet sales at Volkswagen. Convincing him to give the green light was difficult, but ultimately, it worked out.
Despite understandable delays in production and transport to Kosovo due to global crises, investors faced another administrative problem. The municipality of Prishtina lacked regulations that would allow electric taxis and provide them with designated spaces and priority in the city, as is the case in Tirana.
Instead of the procedures being streamlined, Hallaqi had to go through the same processes as for any other car. Finding themselves in this situation, they decided to move forward with the process in Skopje to avoid risking the entire investment.
“I am ashamed to say that in Skopje we completed the procedures in one month, while in Kosovo it took us more than a year. However, the municipality of Prishtina eventually woke up, prepared the necessary regulations and we got the license at the end of 2021,” said Hallaqi. They then abandoned the plans for Skopje and returned to Prishtina.
Until the middle of 2022, electric cars were rarely seen on the jam-packed streets of Prishtina. Hybrid cars were more common. These vehicles combine electricity and gasoline-based energy, operating with batteries at slower speeds while using gasoline at higher speeds.
Investing in electric cars represents a significant financial commitment from Hallaqi and others who decide to make this investment. For example, the cost of investing in chargers, which today, in addition to charging their own cars, are also offered as a service to others, ranges from 80,000 euros for a 120kW charger to over 100,000 euros for a 300kW charger. The capacity of the chargers also determines the charging time — the larger the charger, the faster the charge. According to Hallaqi, charging an electric vehicle for 350 to 400 kilometers of travel using chargers with a lower capacity at the night rate costs up to 6 euros, while charging during the day costs up to 13 euros.
Charging stations are not yet widespread across the country, but there are enough for electric vehicles to navigate, especially in the capital. According to Hallaqi, there is a charger in Peja, and one is expected to be activated in Hani i Elezit, another in Mitrovica, one on the Prishtina-Tirana road in Albania and at the exits of Prizren to the north or south.
In Prishtina’s Germia Park, the municipality, in collaboration with donors from the German Cooperation Organization, installed a solar-powered charger for electric cars in the parking lot, although it has not yet been activated. The Kosovo Electricity Distribution Company (KEDS) has also installed chargers in its yard, and some gas stations offer charging stations as well.
Hallaqi’s fleet currently uses the ID3 VW model, which has a value of 44,000 euros, and another model, the ID4 VW, valued at 54,000 euros. He expects to expand the fleet to 40 vehicles by the end of the year. However, his investment is being hindered by the lack of support from the Kosovo government for the introduction of green cars into the market.
Unlike neighboring countries such as Albania, Serbia and North Macedonia, Kosovo does not offer any excise duty incentives for importing electric cars into the country. There should be incentives because these cars emit far fewer air pollutant particles and are seen as alternatives to vehicles that use fossil fuels like diesel — a major air pollutant and contributor to global warming.
No facilitation of importing electric cars
The importation of electric cars lags behind that of internal combustion engine cars. Germany remains the primary country of origin for these internal combustion vehicles. Hundreds of dealerships sell used cars, usually at least 10 years older than the importation date.
The Law on Vehicles prohibits the import of cars older than 10 years and also restricts the importation of vehicles that do not meet the Euro 4 standard. This regulation aims to protect the environment by limiting the emission of gas and particulate matter (PM). Euro 4 is a standard that applies to cars manufactured since 2006, ensuring that diesel vehicles emit no more than 0.25g/km of nitrogen oxides and gasoline vehicles emit no more than 0.08g/km of nitrogen oxides.
Despite the provisions in this law aimed at preventing harmful gas emissions into the atmosphere, there are no specific provisions differentiating the import procedures for green vehicles. Electric and hybrid vehicles are subject to the same procedures as combustion vehicles, with the exception of one provision stating that the Ministry of Internal Affairs (MIA) has the authority to modify registration procedures and costs for electric and hybrid motor vehicles.
Currently, in Kosovo, the import procedure for an electric car is the same as for a car that uses diesel or gasoline.
If a new electric car is imported, customs will cost 10% of the total value of the product, in this case, the car. This excludes countries of origin that are part of the Central European Free Trade Agreement (CEFTA), the Stabilization and Association Agreement with the European Union (SAA) and the U.K.. For Türkiye, a 2% customs fee applies, as Kosovo has a free trade agreement with Türkiye. The VAT is 18%. When used electric cars are imported, the obligations are the same as with new cars, except that an excise tax is added. Excise duty is a tax imposed because the product incurs additional costs for citizens and is not essential, potentially damaging the environment. However, in Kosovo, the excise duty payment is still required for electric cars, even though they do not release any gas or particles into the air.
Excise duty is 400 euros per unit for vehicles up to eight years old, up 600 euros for vehicles up to nine years old and 700 euros for vehicles up to 10 years old.
The Ministry of Internal Affairs has not responded to K2.0’s questions regarding any initiatives for change. The Ministry of Environment, Spatial Planning and Infrastructure, which is responsible for changing this law, also did not respond to K2.0’s enquiries.
On the other hand, in the Assembly of Kosovo, the Commission for Environment, Food, Agriculture, Planning and Development, which encompasses road transport, discussed the proposition that electric cars be treated differently from internal combustion cars.
“The Ministry of Infrastructure is working to regulate a better legal environment for the import of electric cars, to encourage citizens. They are looking at what the region has done and how we can do it better,” Assembly member Fitore Pacolli, who leads this parliamentary committee, said to K2.0.
At this point the region has made progress. In 2020, Albania decided to exempt electric cars from paying import VAT. In 2017, North Macedonia reduced VAT for imported electric cars from 18% to 5%. In Serbia, citizens who buy electric cars are eligible for subsidies up to a certain amount of the total car price, incentivizing them to switch from internal combustion cars.
There have also been public demands for the removal of customs and VAT in Kosovo. Previously, the Chamber of Commerce of Kosovo, representing local businesses, has requested the removal of customs and VAT to incentivize the transition from internal combustion vehicles.
Until 2016, there were only 14 electric cars in Kosovo. Electric car enthusiasts had begun to experiment. From 2021 to 2023, 585 electric cars were imported into Kosovo, according to data Kosovo Customs shared with K2.0. Meanwhile, according to the Ministry of Economy in the Energy Strategy 2022-2031, the number of electric cars in Kosovo is expected to reach 15,000 by 2031.
The number of electric cars in 2023 vs. projecting the number of Electric Vehicles in 2031.
Despite the lack of support from state authorities, the import of electric cars continues. This is mostly visible by the taxis in Prishtina.
Electric cars, along with mini-trucks and electric trucks, are considered more economically beneficial because they are used daily for significant distances in industries such as goods distribution, the service of commercial agents and taxi services.
Although electric cars require an initial investment, Hallaqi’s ETAXI has found that it has cheaper operation and maintenance costs. Electric cars do not break down as often as internal combustion cars. Following Hallaqi’s lead, other taxi companies in the capital have also started investing in electric vehicles.
“This definitely makes me happy because together we are embracing a new, much more ecological approach in Kosovo,” said Hallaqi. According to him, logistic companies need to switch to electric vehicles since they have a higher traffic turnover.
To promote the use of its electric taxis, ETAXI has digitized its operations. Through an application, customers can order a taxi, set the destination, pay and rate their trip. Additionally, customers are rewarded with 5% of the amount paid for each, which can be accumulated and eventually used for a free trip.
Electric cars are sustainable for the environment
The Kosovo government’s goal is to reduce greenhouse gas emissions by 32% by 2031.
However, similar to the bureaucracy involved in installing solar energy panels, support for importing electric cars and adapting the appropriate legal framework is stagnant. Although the initial investment cost of electric cars may be high, their use significantly reduces air pollution and greenhouse gas emissions, unlike cars that use fuels such as diesel and gasoline.
The number of motor vehicles registered in Kosovo, including cars and trucks with trailers, has steadily increased. In 2016, there were approximately 320,000 motor vehicles, with over 260,000 being cars. According to the Kosovo Agency of Statistics, by 2023 there were over 460,000 motor vehicles, approximately 369,000 of which are cars.
The number of cars in Kosovo continues to grow.
Transport is also one of the biggest sources of air pollution in Kosovo. This is especially noticeable during rush hours when queues of cars waiting at traffic lights pollute endlessly.
The Multimodal Transport Strategy 2023-2030, developed by the Ministry of Environment, Spatial Planning and Infrastructure, notes that in 2019, 1.337 billion kilograms of CO2 were released from transport in Europe, highlighting significant pollution released into the atmosphere. According to the government of Kosovo’s 2023-2031 Energy Strategy, annual emissions reached 9.613 million tons of CO2 in 2019.
According to this strategy, fuel combustion accounts for 86% of greenhouse gasses in the atmosphere. The electricity and heating sector contributed 66% (6.316 million tons CO2eq), while fuel combustion from transport accounts for 20% of pollution.
A 2023 International Monetary Fund assessment states that transport contributes to an annual increase of 4.4% in air pollution in Kosovo, and there was an 80% increase in motorization from 2010 to 2020.
For every 100 kilometers driven in the city, a diesel car consumes an average of 8 liters of fuel, releasing 21.4 kg of CO2. A gasoline car consumes an average of 10 liters of gasoline per 100 kilometers in the city, releasing 19.36 kg of CO2.
However, electric cars do not emit greenhouse gasses while driving. For electric cars, the only emissions considered are those produced during electricity generation. In Kosovo, over 90% of this electricity comes from thermal power plants. These power plants emit approximately 1 ton of carbon dioxide for the production of 1 MWh of electricity. Therefore, for 15 kWh of charging, 15 kg of CO2 is released by the power plant.
Some people choose to install photovoltaic panels, which charge the batteries that then power the cars, creating a clean cycle of energy use.
Burning fuel not only releases CO2, a major contributor to the climate crisis, but also PM particles that pollute the environment. However, advancements in car technologies, categorized from EURO 1 to EURO 6, have significantly reduced PM emissions. For instance, gasoline-powered cars emit 0.108g/km of PM under EURO 1 standards. This has been reduced to 0.0005g/km under EURO 6. Similarly, diesel cars emitted 0.372g/km under EURO 1, decreasing significantly to 0.0037g/km under EURO 6.
Nitrogen Oxides (NOx) emissions have also been reduced. For diesel cars, emissions ranged from 1.92g/km to 0.55g/km across EURO categories, while for petrol cars, they decreased from 1.29g/km to 0.06g/km. In contrast, electric cars emit 0 PM and NOx.
Despite the benefits of electric cars, internal combustion cars still remain the preferred choice, as shown by import numbers. In March 2024 alone, just over 59,000 internal combustion cars were imported into Kosovo.
Feature Image: ETAXI.
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