The use of electric vehicles (“EVs”) and the number of charging stations have been rapidly increasing worldwide in recent years. Türkiye is also taking significant steps, both in terms of legislation and practice, to establish itself in the EV and charging station market. In this article, we review the current situation in terms of EVs and charging stations in Türkiye and around the world, as well as the legal regulations and incentives in Türkiye.
From Past to Present: EVs and Charging Stations
Contrary to general belief, EVs were developed in the 19th century, and the first EV was produced between 1889 and 1891 in the United States. EVs, which had a significant market share prior to the mass production of gasoline-powered cars but lost almost all of their significance with the discovery of vast oil reserves, have regained importance in recent years due to concerns such as energy security, global warming and air pollution. While EVs accounted for less than 5% of global vehicle sales in 2020, this percentage increased to 9% in 2021 and reached 14% in 2022. More than half of EVs have been sold in the People’s Republic of China, making it the largest market in this field and the second-largest market for EVs is Europe, followed by the United States in third place.
One of the primary reasons for the production and preference of EVs is energy security. The indication that fossil fuels will be depleted by 2052 and the increasing use of fossil fuels day by day create concerns in terms of energy security. In addition, the ability to generate electricity provides a much greater advantage in terms of energy security and reduces the fragility of energy supply.
Another reason for the increasing preference for EVs is their low carbon emissions, comparing to internal combustion engine vehicles thereby making a positive impact on fighting the climate change crisis. In line with the objectives of achieving carbon neutrality by 2050, the European Union aims to ban the sale of internal combustion engine vehicles from 2035 onwards and legislative efforts are being carried out accordingly. As a result, many global car manufacturers aim to cease the production of internal combustion engine vehicles and increase the production of EVs in the upcoming years.
In addition, although the European Union has implemented legal regulations requiring them to emit a certain level of sound to ensure pedestrian safety, EVs operate quietly and contribute to the reduction of noise pollution. These data and legal regulations highlight the significant role of the growing adoption of EVs in reducing energy security concerns as well as efforts to mitigate air and noise pollution.
In addition to the advantages, EVs also have certain disadvantages that can be categorized under three main headings: economic, technological, and social challenges. The higher prices of EVs, which can be considered an economic disadvantage compared to internal combustion engine vehicles, are expected to decrease to more affordable levels thanks to tax incentives and the scale of production for EVs and batteries. Range limitations and long charging times are among prominent challenges experienced with EVs. Furthermore, as battery technologies continue to advance and charging stations become more competitive in terms of their quantity and quality, it is expected that the significance of the technological disadvantages of EVs will diminish in the near future. Finally, the social issues related to EVs include the lack of sufficient acceptance by society and inadequate charging infrastructure.
The widespread adoption of EVs relies on the availability of charging stations both in urban and intercity routes. In this regard, the most current and pressing matter that require immediate action concerning EVs, both globally and in Türkiye, is the increase in the number of charging stations and improvement of the charging services provided. In 2022, total number of charging stations in the European Union, including Türkiye, amounted to 535,731; whereas, as of March 2023, Türkiye alone has exceeded a total of 6,500 charging stations. One remark to make is that the charge stations in Türkiye are located in the more populated and western parts of the country like İstanbul, Ankara and İzmir.
The total number of charging stations alone is not a sufficient criterion for evaluating the adequacy or inadequacy of charging infrastructure. Such evaluation also requires the consideration of the number of EVs per charging station and the presence of both fast and slow charging units at the charging stations. Indeed, in order to support the increase in the number of EVs in a sustainable way, it is necessary to ensure an adequate installation of charging stations. Regulation for the Deployment of Alternative Fuels Infrastructure (AFIR) which came into effect in the European Union in 2014, recommends that the number of EVs per charging stations should not exceed 10. France, Germany, and the United Kingdom, which are among the countries with the largest market share for EVs in Europe, have a ratio that exceeds 10; however, it is observed that the Netherlands and Italy are closer to achieving this ratio.
Although the number of registered EVs in Türkiye has grown nearly fourfold compared to the previous year as of the first half of 20238, the ratio of EVs per charging station is still 2.2 as of March 2023. On the other hand, considering Türkiye’s initiatives in domestic EV production, it is expected that the number of EVs will exceed the installation of charging stations by the end of 2023, hence resulting in an increase in this ratio.
Legal Regulations and Incentives in Türkiye
The increasing use of EVs necessitated the adoption of a relevant legislation in Türkiye. In this context, with the amendment to the Law in December 2021, the Energy Transition Department Presidency under the Energy Market Regulatory Authority (“EMRA”) was established and provisions regarding the charging services were included to the Electricity Market Law No. 6446 as a licensed activity. With the amendment to the law, Charging Service Regulation (“Regulation”) was published by EMRA on 2 April 2022.
The Regulation introduced detailed provisions regarding the charging network operator license, rights and obligations of license holders, specifications required for the charging network and charging stations, the relationship between the license holder and the charging station operator, integrated electricity storage activities integrated into the charging stations, and pricing. As of the date of this article, 131 companies have obtained the charging network operator license within the scope of this Regulation.
In the system introduced by the Regulation, legal entities wishing to provide charging services are required to be included in the charging network, similar to the case in the fuel oil and LPG market with the distributorship network. This inclusion to the charging network requires obtaining a charging network operator license from EMRA to qualify as a charging network operator or obtaining a certificate from a licensed charging network operator to qualify as a charging station operator. According to the Regulation, maximum duration of a charging network operator license can be 49 years, however this period can be extended under the conditions determined by EMRA. The Regulation also provides that the licensed legal entities that operate in the electricity market under regulated tariffs, cannot apply to charging network operator license and provide charging services.
The Regulation grants the charging network operator license holders the right and authority to establish or operate charging stations connected to the charging network within the region specified in the license or nationwide and allows for the establishment and operation of charging stations connected to their charging network by third parties under certificates and have loyalty agreements with EV users, enabling them to acquire charging services with certain advantages. Furthermore, charging network operators must establish a charging network within six months from the effective date of their license, consisting of a minimum of 50 charging units, of which at least 5% should be located on highways and state roads, and at least 50% should have a power capacity of DC 50 kW or higher and be located in at least five different districts.
On the other hand, according to the Regulation, private charging stations that do not engage in any commercial activities and charging units set up by users for self-consumption are exempt from the requirement of being connected to the charging network.
Furthermore, the Regulation requires charging stations to obtain workplace opening and operating license in order to commence charging services. Hence, during the adoption process of the legislation, the opening and operation of charging stations also had to be evaluated in terms of workplace opening and operating license. In this regard, the General Directorate of Local Government of Ministry of Environment, Urbanization and Climate Change clarified the matter with the communiqué dated 24 March 2022, regarding the opening of EV charging stations and the evaluation criteria for the issuance of workplace opening and operating license as a subsidiary activity, necessary conditions for the workplace opening and operating license to be issued and occupancy permit, marking on the zoning plan, issuance of passage permit and the issue of whether vested rights will be lost or retained when installing EV charging stations in existing licensed fuel stations.
Türkiye also provides tax incentives for EVs and charging stations. In this regard, with the amendment to the Corporate Tax General Communique, the contribution amounts of EV manufacturers holding investment incentive certificates will be offset against the Special Consumption Tax (“SCT”) as a support for investment in this field. Furthermore, while the SCT rate for internal combustion engine and hybrid vehicles varies between 45% and 220% depending on the engine displacement, this rate ranges from 10% to 60% for EVs. The Motor Vehicle Tax (“MVT”) is applied at a rate which is 75% lower for fully EVs compared to internal combustion engine and hybrid vehicles. Similar to the SCT regulation, there is no specific tax concession for hybrid vehicles in terms of MVT. However, the Banking Regulation and Supervision Authority (BRSA) has introduced more flexible and easier loan options compared to internal combustion engine and hybrid vehicles, allowing for easier access to loan when buying EVs.
With the entry of domestic electric car initiative TOGG and global manufacturer Tesla into the market, Türkiye has become a country with significant goals regarding the EVs, as well as installation and operation of charging stations. As set forth in the Türkiye National Energy Plan published by the Ministry of Energy and Natural Resources in 2022, EVs play a crucial role in achieving the net-zero emissions target by 2053.
Conclusion
The production and sale of EVs have witnessed a significant increase year by year due to advancements in technology, concerns about energy security and environmental considerations. The installation of charging stations has accelerated in parallel with the proliferation of EV production and utilization. As Türkiye continues its efforts to keep pace with global developments, it has also entered into the EVs market through TOGG and the number of stations obtaining a charging network operator license has reached 130. It is anticipated that the sector will witness further progress and growth in the coming years through the implementation of new initiatives and the establishment of collaborative efforts in the field of EVs and charging station installation and that this progress will be supported by new incentives provided by the government.
ASSOCIATE
Müşavvir Enerji / Elektrik Petrol ve Doğal Gaz Madencilik Taşımacılık ve Lojistik Kamu Özel İşbirlikleri ve İmtiyazlar İnşaat ve Altyapı Finansal Hizmetler Projeler ve Proje Finansmanı Bankacılık ve Finans Şirketler ve Ticaret Hukuku Sermaye Piyasası Hukuku Kamu İhale Hukuku Gayrimenkul Hukuku
ASSOCIATE
Avukat Tüketim Ürünleri Enerji / Elektrik Madencilik Savunma Şirketler ve Ticaret Hukuku Birleşme ve Devralmalar Dava ve Uyuşmazlık Çözümleri
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