How to prepare a company for electromobility?

More and more companies are electrifying their fleets and setting up charging points. It was possible to find out about the companies' experience so far, how politicians and State Revenue Service officials see the introduction of electric cars, how entrepreneurs should act and what challenges and benefits should be taken into account in the webinar “How to prepare a company for electromobility” organised by the Elektrum Energy Efficiency Centre on 10 November this year.

Andris Kulbergs, President of the Automotive Association, said that in the European Union (EU), corporate fleets account for about 20% of the EU's total car fleet, but they emit 55% of the EU's total CO₂ emissions from transport. “In the near future, car manufacturers plan to launch several models of electrified light commercial vehicles. The announcement by European cities of the closure of the urban environment to diesel cars also has a major impact on the decisions of car manufacturers. Currently, several cities have announced the ban of any entry of internal combustion engine cars into the city. Riga is also committed to introducing a low-emission zone from 2027, which will also affect the choice of fleet of our entrepreneurs. It is not yet known how large this area will be, but it would be necessary to define it in the near future so that entrepreneurs can prepare in time.

The average CO₂ emission of the Latvian car fleet is currently 230 g/km, and it consists of 67% from diesel cars and 30% from petrol cars. In addition, the car fleet is growing by an average of 3.2% every year, but the average age of cars is 14.9 years. The problem is that new cars only make up 28% and used cars - 72%, of which 61% are over 10 years old. This increases the problem of meeting emission targets set for Latvia. It is necessary to reduce the import of used diesel cars by 50% and increase the share of green cars. If we do not take action to improve the situation, CO₂ emissions from road transport will increase by 8.9% in 2030 compared to 2018.

The main conclusions of the analysis of the current situation are as follows - the existing goals in transport are not achievable in the given timeframe, moreover, there is a lack of coordination between the ministries. In addition, the CO₂ target commitment is unacceptable in the absence of a plan to meet existing targets and a lack of an overall green transport tax policy strategy.

To improve the situation, import barriers for used-up cars and tax exemptions for the low-emission segment should be introduced, large-scale, long-term write-offs of old cars should be made and taxes on internal combustion engines should be significantly increased to maintain a long-term support programme for low-emission vehicles. In addition, it is necessary to support the purchase of low-emission heavy commercial vehicles, as well as to introduce the purchase of “clean” vehicles only in public procurement,” the President of the Automotive Association explains.

Andris Kulbergs emphasised that the support mechanisms for the purchase of electric cars, which are currently provided by politicians, are mostly dedicated to private individuals. However, buyers of new electric cars would mostly be entrepreneurs, unless a mechanism is put in place to make the purchase of electric cars more profitable than the purchase and operation of cars with internal combustion engines. And it is the entrepreneurs, who would be able to react the fastest, provided there are adequate incentive mechanisms. 70% of EU countries have support programmes for low-emission vehicles, which have the desired effect.

“The support programme for entrepreneurs is planned, the necessary budget funds have been earmarked for it, but this programme could be available no earlier than in 2023, and through the Ministry of Economics,” said Andris Kulbergs. 

What should a company consider, when planning fleet electrification?

This was explained by Andris Valdemārs, Transport Services Director of Latvenergo AS:

“In order to electrify the fleet of the company, it is necessary to start with an assessment of the situation in order to understand the development prospects of electric cars, the load on the company's fleet, the use of available electricity charging infrastructure.

The next step is to study the supply of electric cars on the market, what the expected charging costs are and what the life cycle of the car looks like in monetary terms.

In turn, when making a choice, it must be taken into account that it will be necessary to choose not only the car, but also the electric charging infrastructure solution. Will the charging be done on public networks, will a charger with software be purchased, will the charging service be rented, or will the car be charged from the network at home.

In turn, when evaluating the car itself, the purchase price and full life cycle costs, additional equipment included in the price, car safety test results, availability of authorised service providers in Latvia, factory warranty conditions and delivery time must be taken into account. The distance travelled on a single charge, the charging capacity of alternating current (AC) and direct current (DC) (kW) are also important.

Once the car has been purchased and charging solutions have been chosen, it is necessary to change the habits of the car users, train the employees and agree on how to make a payment with the employee if the company's vehicle is charged at home. It will also be necessary to understand how to ensure that the charged kWh is accounted for and applied to a specific vehicle and what rate of electricity consumption can be applied to operating costs.”

 

The company DPD Latvija has also started its way to an electrified fleet. Chairman of the Board Jānis Grants: “Our goal is to ensure all deliveries in Riga in an environmentally friendly way by 2025 using electric buses. More than three million euros of investments are planned for the creation of the environmentally friendly car fleet. The project is successful and interesting enough. 17 electric buses have already been purchased and deliveries are made in Riga, Jēkabpils, Liepāja and Rēzekne. 

During the implementation of this project, we had to face the fact that the offer of electric buses is not as large as we would like; the offer of electric cars is more focused on the private car segment than the commercial car segment. The replacement of the fleet must be planned gradually, as the currently available electric cars are not suitable for all the necessary routes. It should also be taken into account that the efficiency of an electric car battery depends on the air temperature. When the air temperature reaches at least 10 ^oC, one electric car can drive up to 100 km per day, but when the temperature drops below 10 ^oC - only up to 50 km,” says Jānis Grants.

Electricity accounting and documentation in accordance with the requirements of regulatory enactments

When starting to operate an electric car in a company, of course, you need to know how to keep electricity records and keep documentation in accordance with the requirements of regulatory enactments. Līga Īvāne, Chief Tax Inspector of the Tax and Fee Accounting Methodology Division of the State Revenue Service, explained that the norms of tax and accounting regulations are applicable to vehicles for which electricity is indicated as fuel in the vehicle register, just like any other vehicles.

In order for the company to be able to reflect the electricity consumed for charging electric cars and the costs related to electric cars in its expenses, justification documents must be prepared that comply with the requirements of Section 7 of the Law “On Accounting”.

In order to prove that the car is used to provide VAT taxable transactions, a registered taxable person keeps records of business trips using a route control system, a device that receives signals from Global Positioning System (GPS) satellites and determines the car's coordinates in real time and location, keeps track of the actual kilometres travelled.

The expert explained that the purchase of fuel is included in operating expenses on the basis of the actual number of kilometres travelled each month in accordance with the taxpayer's fuel consumption per 100 kilometres set by the manufacturer, which does not exceed the manufacturer's urban cycle fuel consumption by more than 20%. Vehicles, that have electricity or electricity and petrol listed as fuel in the vehicle register, are subject to the same corporate tax rates as any other vehicle.

Expenditure on fuel, including electricity, related to economic activity, whether or not the vehicle is used exclusively for economic activity, if one of the following criteria is met:

• the vehicle is subject to Company car tax (CCT) of 10 euros per month for electric cars,
• the vehicle is exempt from CCT according to Article 14, Paragraph one, Clauses 5 and 6 of the Law on Vehicle Operation Tax and Company Car Tax,
• the taxable person is an eligible agricultural service cooperative society, an eligible forestry service cooperative society or a fisherman's farm.

In these cases, it is not necessary to keep records of journeys, for example with road notes or route sheets, to justify the use of electricity for the provision of economic activities.

On the other hand, if the CCT is not paid or the company is exempt from the CCT, the costs of electricity used for charging are eligible for expenses of economic activity, if those expenses are directly related to the economic activity of taxable person and do not exceed the manufacturer's electricity consumption rate by more than 20%. However, in order to justify the use of a vehicle for economic activity purposes, the use of electricity for the purposes of economic activity must be detailed in accordance with the procedures laid down in the accounts of the accounting organisation.

If the electric car is to be charged at the employee's place of residence, the employee is obliged to register the economic activity with the SRS, provide a separate electricity commercial metering device and formalise a justification document. 

How is the charging infrastructure for electric cars developing?

Ansis Valdovskis, Head of Electric Vehicle Charging Network Development of Latvenergo AS, points out that car manufacturers have unequivocally chosen electromobility as the main way to reduce emissions and meet the requirements of the European Green Deal. “We are already seeing a sharp increase in the number of electric car and plug-in hybrid car registrations in Europe. Car manufacturers are increasing the number of models available and are making new commitments, for example, several manufacturers have committed to producing only electric cars from 2030 onwards.

At present, the cost of producing new batteries is projected to fall by 58% by 2030, but from 2025 onwards, electric cars will become cheaper than cars with internal combustion engines. In addition, the levelling of the price of electrified light commercial vehicles could be expected even sooner.

Municipal and national legislation reflects a commitment to stop the sale of petrol and diesel cars. For example, Norway plans to do so from 2025, Denmark, Ireland, Israel, Slovenia and other countries from 2030. Latvenergo forecasts that in 2030 without the support mechanism there will be about 36,500 electric cars in Latvia, but with support mechanisms - 58,140 electric cars.

Looking at the overall situation of the charging network in Europe, there are currently around 300,000 public charging points available, with 1 million charging points projected by 2025. By 2025, at least 1000 public charging ports are needed in Latvia. In addition, it should be taken into account that since 2021, a law has entered into force in Latvia, which stipulates that all new building construction projects must provide for charging points for electric cars in parking areas,” Ansis Valdovskis explains.

Establishment of electric car charging points

What should a company expect when switching to electric transport? Deniss Kiseļovs, Head of the Energy Management and Mobility Unit of Latvenergo AS, says that it is very important to understand the requirements for installing an electric car charging station, which is a complex technological device in itself. 

“Safety has changed with the move to electric cars. It is possible to refill the car at home and the person responsible for this safety also changes. It is equally important to understand, that the cost to refill a car for 100 kilometres depends on how fast it will be refilled. There are standard charging points (3.7 kW - 22 kW) and high power charging points (> 22 kW). 

If you plan to charge the car for 100 kilometres in eight hours - the usual socket, for which the housekeeper is responsible, will work. The most powerful equipment will be able to perform the same charging in five to six minutes, but engineers have already taken care of safety. The most popular solution in the world - the device, which will charge in a few hours (22 kW), can be purchased by the car owner. However, when choosing this option, you need to know what the legal and regulatory requirements are for safe charging. Therefore, there is no clear answer to the question: “Which device should I choose - slow or fast?” Each case is individual and many circumstances need to be considered. It is necessary to understand the purpose of the equipment installation, what the safety measures will be, what the available capacities are, the peculiarities of the installation site, the preferred payment procedure with the customers, and how many cars need to be charged at the same time. Only then will it be possible to make conclusions about the capacity, design and installation costs of the charging equipment,” said Deniss Kiseļovs.

 

Mūkusala Business Centre experience in installing a charging point

"Elektrum" Energoefektivitātes centrs ar vairāk nekā 23 gadus uzkrāto pieredzi un zinātību veido sabiedrības izpratni par energoresursu efektīvu izmantošanu, izglīto par daudzveidīgiem risinājumiem energoefektivitātes paaugstināšanā, rīkojot vebinārus un pasākumus, sniedzot konsultācijas. Visi šī vebināra materiāli un lektoru prezentācijas ikvienam bez maksas ir pieejamas elektrum.lv/seminari sadaļā "Semināru arhīvs", kā arī ir iespēja pieteikties konsultācijai par uzlādes pieslēgvietas ierīkošanu vai tās aprīkošanu ar Elektrum uzlādes nomas pakalpojumu.

Elektrum Energy Efficiency Centre with more than 23 years of experience and know-how creates public awareness of the efficient use of energy resources, educates on various solutions to increase energy efficiency, organises webinars and events, provides consultations. All materials of this webinar and lecturers' presentations are available to everyone free of charge in the section “Seminar archive” of elektrum.lv/seminari, as well as it is possible to apply for a consultation on installing a charging port or equipping it with an Elektrumcharging rental service. 

Elektrum electric car charging offer for business