Industry Trend Analysis - Incentives Take Hold But Affordability And Infrastructure Challenges Loom - NOV 2017

BMI View: Although Romania ' s EV incentives have shown some success in driving demand for new EVs , the affordability constraints on consumers , coupled with the country ' s weak EV charging infrastructure , will dampen the effectiveness of the incentives .

In May 2017, the Romanian government expanded its incentive scheme to further support the electric vehicle (EV) market as part of its 'Rabla Plus' scheme, while also renewing its 'Rabla Classic' scrappage scheme aimed at renewing the Romanian vehicle fleet with low-emission vehicles. Although the additional incentive scheme has already boosted EV sales by 302%, from 49 units sold in April 2017 to 148 units sold in July 2017, EV sales still face significant barriers such as affordability and inadequate charging infrastructure.

Incentive Policies Boost EV Sales
Romania - BEV, EREV, PHEV Sales
Note: BEV - Battery Electric Vehicle, EREV - Extended Range Electric Vehicles, PHEV - Plug In Hybrid Electric Vehicle. Source: APIA

Affordability Will Challenge EV Sales Growth

EV sales in Romania have been performing well following the introduction of further incentives; however, we note that Romania's income levels remain relatively low when compared to the European region. Our Country Risk team expects Romania's net household income to reach a high of USD11,425 by the end of our 2017-2021 forecast period, which remains well below the European average of USD30,358 over the same period. This affordability constraint means that only more affluent households can afford to buy an EV and this is reflected in the top selling EVs thus far in 2017, with BMW obtaining the largest market share with 31% of total sales which represents 46 units sold and Mercedes-Benz coming in second place, obtaining a 27% market share for H117 with 40 units sold ( see chart below).

Luxury Brands Dominate
Romania - EV Sales By Brand (H117)
Source: APIA

Charging Infrastructure Will Hold Back EV Uptake

Although EV sales will receive a boost from the new incentives, albeit in very small volumes, we believe that the lack of EV charging infrastructure will pose a significant barrier to further EV sales growth. Although Romania's EV charging infrastructure expanded by 80.3% from 61 locations in 2016 to 110 current locations as of H117, it lags behind its European regional peers ( see chart below) . This limited availability of charging facilities will prevent a greater uptake of EV vehicles and keep the utilisation of EVs centralised to cities.

Low Charger Availability Threat To Incentive's Success
Romania - EV Charging Stations Per 1,000 Cars
Source: National sources, EAFO, BMI