A new law promoting electric transport in Panama was signed off by Panamanian President Laurentino Cortizo this week, as part of a broader effort to reduce greenhouse gas emissions, encourage the use of renewable energy, and promote sustainability.
Law 162 offers a five year period of exemption from vehicle licensing fees for all electric vehicles. That five year period will begin when an electric vehicle is purchased, or from the moment of the law being enacted for electric vehicles that were already purchased.
The law also dictates that by 2025 all types of transportation overseen by public institutions must be in the process of transitioning to electric power.
According to a press release issued by the Panamanian President’s office, the new law regulates the development and operation of electric mobility in Panama, promoting the transition from petroleum powered to electric vehicles, while establishing a range of measures and incentives to encourage uptake of electric transport among public, private, and academic organizations.
“This new law is aligned with the Government’s energy strategy to migrate towards less polluting energy sources, a policy that today takes on greater importance with the rise in hydrocarbon prices subject to geopolitical and external factors,” Cortizo was cited as saying at the signing-off of the law.
SEE ALSO: Lawyer in Panama: Find a Good Corporate Attorney
Under the terms of the new law, by 2025 at least 10% of vehicles used and managed by public entities must be electric, and by 2027 that proportion must have risen to a quarter of vehicles. By 2030, the proportion of electric vehicles used by such institutions must have reached 40%.
Mass transportation and public transport providers are subject to slightly different demands after 2025, with 20% of vehicles needing to be electric by 2027 and 33% by 2030.
The new law promoting electric transport in Panama will be overseen by the country’s Transit and Land Transport Authority (ATTT), which will be charged with carrying out annual reviews to track progress.
Meanwhile, the National Energy Secretariat and individual municipalities will manage the necessary expansion of electric charging facilities. As part of the new initiative, new green license plates will be introduced for electric vehicles.
Any institution that fails to comply with the law faces losing its operating certificate.
Law promoting electric transport in Panama offers opportunities to investors
The electric vehicle market has been growing exponentially in recent years, with global sales doubling in 2021 alone. That trend has inspired a range of well-established car manufacturers committing to transitioning to purely electric vehicles in the coming years.
While Tesla is arguably the best-known car manufacturer that only produces electric vehicles, a growing number of brands are emerging.
They include electric truck maker Bollinger, Chinese car manufacturer Byton, electric van and minivan producer Canoo, and Vietnam’s VinFast, among many others. Tech titan Apple is also reported to be working on an electric vehicle.
Amid the growing demand for electric vehicles, laws such as that which has been passed to promote electric transport in Panama offer significant opportunities to firms working in the electric vehicle space.
Currently, Latin America’s electric vehicle market is in its infancy, with the impressive 75% growth in sales in 2021 still not matching the doubling of sales seen worldwide. That despite the fact that 2021 saw massive leaps in sales in the likes of Chile (+231%), Ecuador (+225%), and Peru (+160%).
While incentives such as tax exemptions and reductions are in place, considerably more room exists for greater official effort to be made to promote electric vehicle usage in Latin America.
The new law promoting electric transport in Panama is a prime example of the sort of measure that can be taken, with the Central American country now likely to see considerable growth in its electric vehicle market, if for no other reason than the fact that public institutions are now compelled to begin to transition away from petroleum vehicles.
Colombia has one of the most impressive electric car markets in Latin America, accounting for more than 30% of the electric vehicles in usage in the region in 2020.
In Central America, meanwhile, Panama’s neighbor Costa Rica has arguably the most developed electric vehicle market, with more than 1,738 electric vehicles in usage in 2020, compared to just 20 in Panama that same year.
However, given the ongoing rapid growth of this market, and increasing awareness among governments of the need to promote it, uptake of electric vehicles and opportunities for manufacturers are set to grow significantly in the coming years – with that trend now guaranteed in Panama.
Biz Latin Hub can assist you doing business in Panama
At Biz Latin Hub, we provide integrated market entry and back office services throughout Latin America and the Caribbean, with offices in 17 key cities around the region, including Panama City.
Our unrivaled presence makes us ideal partners for supporting multi-jurisdiction market entries and cross-border operations, and we count a host of major corporations, as well as startups and NGOs, among a long list of past and current satisfied clients.
Our portfolio includes company formation, accounting & taxation, corporate legal services, due diligence, and hiring & PEO, among others. Meaning that we can cater to almost any investment needs in nearly every market in the region.
Contact us today to find out more about how we can support you doing business in the region.
If you found this article on the new law promoting electric transport in Panama of interest, check out the rest of our coverage of this prosperous Central American market. Or read about our team and expert authors.