EVs emerging in Brazil but which states offer fiscal incentives?
Electric Vehicle (EV) and hybrid vehicle sales are on the rise in Brazil but only about half of its states have fiscal incentives to reduce or exempt the country’s motor vehicle property tax IPVA on these types of vehicles.
While EV sales in Brazil rose 40% in 2022 to 49,245 units, sales during January-April 2023 jumped 51% compared to the same period in 2022, according to the country’s EV association ABVE.
During the first four months of the year, 19,579 units were sold, being 2,532 100% electric (BEV) and just over 17,000 hybrid (HEV). The trend does not look to be slowing down considering the increase in activity by players such as Chinese automakers BYD (Build Your Dreams) and GWM (Great Wall Motors), but also others.
States with tax incentives
To meet sustainability guidelines and to encourage the use of electrified vehicles, below is a table mapping out IPVA exemptions in the fourth quarter of 2023. There could be legislative changes in 2024.
| State | Exempt for BEV | Exempt for HEV |
| Distrito Federal | 100% | 100% |
| Paraná | 100% | 100% |
| Minas Gerais | 100% (if built in state) | 100% (if built in state) |
| Rio Grand do Norte | 100% | 100% |
| Maranhão | 100% | -- |
| Rio Grande do Sul | 100% | -- |
| Pernambuco | 100% (starting 2024) | -- |
| Mato Grosso do Sul | 50% | 50% |
| Ceará | 50% | -- |
Regarding other states with benefits, Rio de Janeiro has a 0.5% tax rate for BEV and 1.5% for HEV. The normal rate in the state is 3% for passenger cars and 4% for light commercial vehicles (LCV). In Alagoas, it is 2% (BEV) and 1.5% (HEV) starting in 2024, a state which usually charges 3%.
As for Brazil’s largest city, São Paulo, besides being exempt from the license plate rotation law which mandates driving restrictions one day a week, those with BEV and HEV pay half of the normal 4% tax rate for passenger vehicles (limit of R$3,500). Among state government officials currently discussing the possibility of IPVA exemptions or discounts in the near future are those from Bahia, Espírito Santo, Goiás, Mato Grosso, Pará, Rondônia, and São Paulo.
Depending on the type of vehicle and the state, IPVA rates on an internal combustion engine (ICE) vehicle can vary, but they are usually between 3-4%.
Savings could add up in some states if you have a large fleet of EVs. For instance, IPVA is 3.5% in the federal district (Distrito Federal) and in Paraná and in the city of São Paulo, it is 4%.
EV Charging
Like many other regions of the world, charging infrastructure will also need to accompany the trend of EV vehicle growth in Brazil. With just over 3,500 charging points spread across the country (nearly 50% in São Paulo state alone), work will be needed to maintain the necessary ratio of one EV charger for every 10 EVs as some experts say.
In Brazil, EVs are seen representing some 5% of the circulating fleet in the country by 2030. Considering the 72 million cars and LCVs in the country today (2023), that would mean 3.6mn EVs or to say 360,000 EV chargers, and that is if the national fleet does not grow.
Besides the abundance of minerals in the country to manufacture EV batteries, Brazil does have a strong electric matrix with some 90% of its energy being renewable so it is in the position to take a leading stance. It will take motivation and will from both the public and private sectors.
