The effort to strengthen electromobility in Cyprus is progressing, however, the market is not moving at the pace it can, given that Cyprus and its citizens can benefit, unlike other countries, from "free" electricity at home, even with photovoltaic cuts, most days of the year.
In fact, the debate that had been formed in previous years in order to find solutions to strengthen electromobility seems to be based on the wrong basis, since a market research we conducted reveals that the thorns in the electric car market do not only concern economic, but also psychological trends in the entire market.
More specifically, the biggest problem discussed over the years was primarily the absence of infrastructure, i.e. chargers in various areas and on the road network. However, given the short distances of Cyprus and the fact that most electric cars easily cover daily commutes due to autonomy, even outside cities, it does not seem to affect, at least to the extent discussed, potential buyers of electric cars.
In fact, this inhibiting factor seems to be eliminated for those citizens who have their own photovoltaic systems and can charge their vehicles at home. However, even for those who do not have a home charger the problem is not relatively big, since the range offered by most electric cars ranges between 400 and 500 kilometers on each full charge, so for the vast majority of drivers, the need to charge the car is reduced to 1 to 2 times a week.
They influence the market
From the market research we carried out, it appears that the electric car market in Cyprus is mainly influenced by different factors that are initially unrelated to each other and do not depend on a single decision, but which have a common denominator.
In particular, the first factor is the cost of financing. The so-called "green loans" offered for the purchase of an electric car do not have a substantial difference in interest rate from other loans for the purchase of a conventional car. This difference is at 0.25% less interest rate. The only incentive that is essentially offered is the extension of the repayment of the loan for an electric car to 8 years, which, however, may reduce the monthly instalment, but gives additional income to the banks.
Essentially, in practice the difference in the interest rate is very small and does not create a strong financial incentive for someone to choose an electric car instead of a conventional car, especially when electric cars have a higher cost in their initial purchase.
The second factor is the uncertainty surrounding government subsidy schemes. The grants are not permanent and there is no clear picture of when plans will be opened or even whether they will continue as the previous ones. This leads many interested parties to wait or even to think about whether or not it is advantageous at the moment to proceed with a purchase. At the same time, the system based on applications and lotteries has been criticized for distortions, as in some cases the subsidy is not directly linked to the final purchase of the vehicle.
That is why the authorities are also making announcements about runners-up of the plans, since some who applied never proceeded with an order for the vehicle.
The third factor is the prices of electric cars, which is even related to the second factor and the subsidy schemes. It should be noted that in the long run it may be advantageous to switch from conventional fuels to electric mobility, however, the initial cost is large and difficult to collect by many interested parties.
In particular, during periods when there is no subsidy scheme in force, several dealerships proceed with significant discounts on cars, in order to move the market, in addition to the subsidies (this of course has roots in another issue with the agreements of the dealers in Cyprus which seem to be obliged to proceed with a certain number of orders to the car manufacturers, regardless of whether there are orders from interested buyers.
That is why we also see a similar phenomenon with discounts on ready-to-deliver conventional cars). These discounts and generous offers, however, reinforce the assessment that final prices are partly formed based on the existence or non-existence of state incentives, thus creating strong fluctuations in prices and in the confidence of buyers as to whether the moment they choose to proceed with the purchase is the most advantageous. Essentially, this practice results in a lack of a stable image in the market.
The fourth factor is uncertainty about the long-term value of electric vehicles. Many prospective buyers can't know, but no one can estimate for sure how long an electric car will keep its resale value after a few years of use. Already the first indications show that their value is decreasing to a greater extent than in conventional cars.
There is also a strong concern about the cost of replacing the battery over time. From the market research we carried out and to a relevant question we asked experts, there was no clear answer, since no one knows either the cost or the value that a car that today costs more than 50,000 euros will have in 6-7 years.
Financial, institutional and psychological problems
Summarizing the above, the resulting picture shows that the electric car market in Cyprus could be even larger, if these factors could combine to offer the right incentive for the transition to electric mobility.
Now, based on the data, we have moved away from technical constraints or lack of infrastructure as a problem and recognized that economic uncertainty and the lack of a stable framework, but also the right incentives, are the important points for the market to receive the boost it could have. At the moment as things stand and according to market estimates, the problem is now located in a combination of economic, institutional and psychological factors that affect demand, essentially not allowing the market to develop the momentum it could have.
