Regulations on Electric Vehicle Charging Stations: A Comparative Analysis

Introduction

Türkiye has announced its goal of net-zero carbon emissions by 2053. This transition will necessitate the involvement of a key component of our daily lives: transportation. To this end, Türkiye has accelerated its efforts to adopt electric vehicles as the primary means of transportation. Adoption of electric vehicles necessitates proliferation of electric vehicle charging infrastructure. To enable this transition, Türkiye has adopted a number of laws and regulations, and made key revisions to existing legislation: namely the Law on Electricity Markets No. 6446, the Regulation on Charging Service published on the Official Gazette dated April 2, 2022 and numbered 31797, Parking Regulation published on the Official Gazette dated February 22, 2018 and numbered 30340, Planned Areas Zoning Regulation published on the Official Gazette dated July 3, 2017 and numbered 30113.

First, this article will briefly explain the current state of the Turkish electric vehicle market and the challenges it faces in relation to recent trade measures. Second, the article examines recent legal developments in the European Union regarding electrical vehicle charging legislation: namely the Energy Performance of Buildings Directive revised as of April 24, 2024; Alternative Fuels Infrastructure Regulation revised as of September 13, 2023; and Renewable Energy Directive II revised as of October 18, 2023. This article aims to provide a comparative analysis for electrical vehicle charging legislation in the European Union and Türkiye.  This article will be the first in a two-part series.

1. Electric Vehicle Market in Türkiye: Challenges and Opportunities

Türkiye has pledged to achieve net-zero carbon emissions in its First Nationally Determined Contribution for the Paris Agreement. In accordance with this pledge, Türkiye has made electric vehicles (“EV”) a cornerstone of climate and energy transformation. Since then, both the private and public sectors have taken a number of initiatives such as the partnership between TOGG and Farasis Energy for electric vehicle and battery manufacturing. In this article, we will first talk about EV manufacturing investments in Türkiye and the EV markets in general. Second, we will talk about the Ministry of Trade’s (“Ministry”) recent adoption of trade measures and their effects on EV markets. Thirdly, we will talk about the EV charging industry in Türkiye.

a) Electric Vehicle Investments and Markets in Türkiye

Back in 2020, Türkiye’s Türkiye’nin Otomobili Girişim Grubu (“TOGG”) or the Turkish Automobile Enterprise Group announced its partnership with Farasis Energy, a Chinese battery manufacturing company. This partnership garnered global attention as the International Energy Agency (“IEA”) has shown TOGG and Farasis Energy as examples of close and mutually beneficial cooperation of electric vehicle and battery manufacturers in its Global EV Outlook 2024 Report. In this report, the IEA highlighted that electric vehicle batteries are not transferrable to another industry and can only be used in electric vehicles, therefore too much investment in this industry may cause an overcapacity problem. In this respect, this partnership is mutually beneficial because it provides Farasis Energy with an entirely barren market while giving the opportunity to develop the necessary battery technology for Türkiye in close partnership with a major domestic EV manufacturer, which is essential to ensure a strong supply chain.

An important recent development in the market came in early July, when numerous media outlets announced that the Chinese EV manufacturer BYD was planning to invest 1 billion USD to construct a new EV manufacturing factory in Türkiye. BYD overtook Tesla in late 2023 as the world’s biggest seller of EVs. This significant investment decision comes after a price war between EV manufacturers in China, with only 20 achieving a domestic market share of one percent or more. This price war coupled with recent trade remedies the European Union implemented against Chinese EVs prompted Chinese manufacturers to look elsewhere for market share. Opening the planned plant in Türkiye will come with the added benefit of allowing Chinese manufacturers easier access to European markets through the customs union.

The Turkish EV market has shown exponential growth from 2021 to 2024, and this growth is projected to continue with incentives, developments in infrastructure, and new investments for domestic production. In the first half of 2024, EV sales in Türkiye were up 233.1% on an annual basis with 35,600 EVs sold. The EV’s market share soared to 7.7% of all automobile sales. According to the Global EV Outlook Report 2024, Türkiye ranks as the first market for EVs outside of Asia, followed by France, the Netherlands, Italy, and Spain. The EV market does not only consist of passenger cars but also heavy duty vehicles. Although the market share for those vehicles is still miniscule, Türkiye is a signatory to The Global Memorandum of Understanding on Zero-Emission Medium and Heavy Duty Vehicles (Global MOU). The States party to this memorandum committed to reaching 100% zero-emission sales in 2040 and 30% by 2030. This means that Türkiye has committed to increasing electric truck sales as well.

2. Trade Measures Against Electric Vehicles in Türkiye

a) Restrictions on the Import of EVs

The first blow to the import of EVs came when the Ministry adopted a restriction on the import of EVs on December 31, 2023, effective as of January 1, 2024. This restriction was adopted after the EU’s crackdown on Chinese EV imports and the start of domestic sales of Türkiye’s own EV manufactured by TOGG. The restriction concerned all imports of EVs, except those imported from the EU and countries with which Türkiye has a free trade agreement. The concerned imports now require an authorization certificate from the Ministry of Industry and Technology. This authorization is subject to fulfillment of five main criteria: (i) establishment of at least 20 authorized service stations in all seven geographic regions, (ii) establishment of a call center with Turkish speaking staff, (iii) certification of employees working in after-sales by the Turkish Standards Institute, (iv) having a representative seated in Türkiye, and (v) providing a commitment letter for tracking battery systems. The Ministry stated consumer protection as the primary reason for the restrictions. However, some importers of EVs perceived the new restrictions as a “punishment on EV importers.”

b) Imposing Additional Duties on EVs.

The second blow came on June 8, 2024, when Türkiye announced additional duties of either 40% ad valorem (according to value) or $7,000 per item, whichever is higher, on internal combustion engine and hybrid passenger cars of Chinese origin. The additional duties entered into force on July 8, 2024. This measure was adopted right after the four-fold increase in Chinese imports of cars in the last year. This could seriously impact Chinese manufacturers who are in the budget hybrid passenger car market in Türkiye. However, there is an important exemption to the additional duties: companies who invest in Türkiye will not be subject to these additional duties. This exemption seems to be in line with Türkiye’s goal to boost foreign direct investment into the country.

c) Electric Vehicle Charging Industry in Türkiye

Like battery manufacturing, EV charging is an essential industry that sustains the EV industry. The proliferation of EV charging stations and the establishment of a strong EV charging infrastructure are the necessary next steps to a Türkiye with net-zero carbon emissions. Expansion of EV charging infrastructure is notably important for Türkiye because the majority of the population lives in apartment buildings with no access to private charging units. Türkiye is well aware of the critical role expansion of the EV charging network will play. This is partly the reason why the regulatory framework mandates EV charging station network license holders establish a network of at least 50 charging stations within six months. According to the Energy Markets Regulation Authority (“EMRA”), as of April 1, 2024 there are 17,233 charging stations in Türkiye. The ratio of EVs to charging outlets in Türkiye is 1:5.4 compared to the European average of 1:13.75. This ratio shows that Türkiye is performing well in the e-mobility ecosystem in terms of charging unit availability.

Despite the rapid expansion, EV charging station operators and charging network operators are still facing problems regarding connectivity and reliability problems concerning the power grid throughout the country. That is why EV charging stations are heavily supported by incentives that incrementally increase inversely to the level of development in the region of investment such as: (i) customs duty exemption, (ii) VAT exemption, (iii) corporate tax deduction, (iv) insurance premium employer share support, (v) investment land allocation, (vi) interest payment support, and (vii) income tax withholding support.

There are also various policies facilitating the accessibility of EV charging stations in Türkiye. First of all, all charging services are priced solely based on the unit energy cost (TL/kWh), eliminating additional fees. This standardized pricing approach has contributed to market transparency and development. Secondly, the EMRA introduced the mobile application Şarj@TR, which allows users to locate and assess available charging stations, view charging station types and power levels, check service availability, and monitor real-time pricing.

Looking ahead, projections based on demographic and market growth factors suggest continued expansion of both EV adoption and charging infrastructure in the upcoming years. Türkiye is taking both regulatory and policy action to accelerate the expansion of EV charging networks throughout the country.