Seven Actions Armenia Can Take to Accelerate the Adoption of Electric Vehicles

Armenia is poised to benefit economically and environmentally from electric vehicle adoption, driven by affordable electricity and regulatory reforms. By implementing a comprehensive policy framework, the nation can enhance air quality and reduce dependency on imported oil.

The global sale of electric vehicles increased by 35% in 2023. However, this growth was concentrated in the People’s Republic of China, the European Union, and the United States. Armenia is also well suited to adopt electric vehicles.

Powered by natural gas, nuclear energy, and hydro, Armenia has one of the region’s lowest levels of carbon emissions per unit of electricity generated. Reducing the oil that is used would bring economic benefits. In 2022, Armenia spent nearly $500 million importing refined petroleum.

Electricity is relatively affordable and the country has implemented diversified day/night tariffs, encouraging electric vehicle owners to charge their vehicles at night when electricity demand and prices are lower.

Regulatory barriers to the expansion of charging stations have been removed and a diverse range of entities can enter the charging market.

“Range anxiety,” which is one of the main barriers to consumer acceptance of electric vehicles, is less relevant because of Armenia’s small size. One could drive its length with only one or two stops to charge.

Lastly, it would save lives. Because of traffic emissions, air quality is a serious problem in Yerevan which was ranked in 2023 as having the 27th highest concentration of dangerous particulate matter among capital cities.

This air pollution leads to premature deaths. The World Health Organization estimated air pollution caused one-sixth of the deaths in Armenia from stroke and ischemic heart disease.

Given these advantages, Armenia should pursue an aggressive seven-part policy to promote electric vehicles.

Continue tax incentives. Through 2025, electric vehicles will incur neither import duties nor value-added taxes. This tax relief is helpful, and the government should consider extending it beyond 2025.

However, the tax incentive limits the number of eligible vehicles. Although imports to date have fallen below the quota, demand should increase. To offset, the tax incentives should be phased out for more expensive electric vehicles. This would promote widespread adoption of electric vehicles while eliminating a loophole for duty-free luxury cars.

Tighten emission standards. Despite the tax break, only 4,500 electric vehicles were imported in 2023. Although nearly a twofold increase over 2022, electric vehicles are still underrepresented.

In addition to making electric vehicles more attractive, Armenia should consider making cars with internal combustion engines less attractive.

Armenia, as a member of the Eurasian Economic Union, applies the Euro-5 emission standards. This puts Armenia a decade behind the EU, which has adopted the Euro-6 standards since 2014 and which will be implementing the Euro-7 standards from 2025.

Moreover, tighter emission standards will mitigate the aforementioned health dangers of air pollution.

By adopting a multifaceted strategy, Armenia has a unique opportunity to deliver on those aspirations while slowing climate change and reducing its dependency on foreign energy.

Invest in charging infrastructure. As of 2023, Armenia had 198 charging stations. That puts it roughly on par with Germany and the United States in terms of charging stations per electric vehicle.

However, given the low base, electric vehicles will likely increase exponentially over the next few years, especially if sound policies are implemented. Electric vehicle charging stations will need to keep up, with an emphasis on fast-chargers. Assuming that by 2030 one out of four Armenians own a car and 10% of the vehicle stock are electric vehicles, Armenia would need a 15-fold increase in charging stations to maintain current proportions.

Here, transport and urban planning play a major role. Municipalities can require a proportion of public parking spots to provide charging. Licenses for new apartment buildings should ensure charging is available to tenants, and as Armenia builds the North-South Corridor, the Crossroads of Peace, and other critical transport infrastructure, the Asian Development Bank and other development partners, with whom Armenia is preparing these projects, would be keen to ensure that rest stops and associated facilities provide opportunities for drivers to recharge.

Introduce electric public mobility. The government can use e-buses to introduce consumers to electric vehicles. E-buses would also contribute to reducing air pollution. The cost of e-buses has declined, rendering them now comparable to CNG buses.

Because the bus fleet is replaced gradually, there is an opportunity to pilot and gain experience. This also provides the time to construct bus stations that are equipped to house, maintain, and charge e-buses.

Invest in maintaining electric vehicles. To sustain electric vehicles, Armenia needs to invest in the capacity to maintain electric vehicles. This involves both infrastructure development, such as workshops for private car owners and specialized facilities for buses, and human capital development through technical and vocational education and training (TVET) programs aimed at electric vehicle maintenance specialists.

Build out renewable energy and the electricity grid. Armenia will only realize the full advantages of electric vehicles, both for climate change and energy independence, if it can in parallel increase its use of renewable energy.

Armenia has substantial renewable potential. The average annual solar energy per square meter of horizontal surface is 1,720 kilowatt-hours, more than 70% higher than the European average. Wind resources are also considerable.

To realize this potential, Armenia will need to invest in its grid and to pilot energy storage to manage the weather-induced fluctuations that are inherent to renewable energy generation and to transmit renewable energy from its often-distant source to where the energy is consumed.

Take advantage of concessional resources. Promoting electric vehicles is more expensive than conventional policies. The Asian Development Bank and other development partners can help. With access to grants and low-interest loans that were established to help developing countries with the green transition, development partners bring not only technical expertise but also financing.

One of the blessings of economic development is that citizens start to demand cleaner air and more livable cities. By adopting a multifaceted strategy, Armenia has a unique opportunity to deliver on those aspirations while slowing climate change and reducing its dependency on foreign energy.

This blog post was first published in the Armenpress news agency.