Iceland to Subsidise Electric Cars for Rental Companies

The Icelandic government is going to spend ISK 1 billion on subsidies for car rental companies to purchase electric vehicles. The move is part of the country’s effort to meet its climate goals by cutting carbon emissions, RÚV reports.

The grants are subject to specific conditions regarding use and pricing. The rental companies have to purchase electric vehicles and the subsidy only covers part of the costs. The cabinet hopes that the subsidies will encourage rental companies to switch to electric cars, despite the higher costs compared to traditional petrol vehicles.

Minister of Environment, Energy and Climate Guðlaugur Þór Þórðarson stressed the importance of rental companies contributing to the transition to sustainable transport. He told RÚV that rental companies make up a significant portion of the national fleet and their participation is crucial to achieving emissions targets.

The high cost of electric cars has deterred rental companies from purchasing them in the past, but the subsidies should make the switch easier. The government has also abolished VAT on electric cars, with a certain limit per vehicle, to encourage the general public to make the switch. It also promises to expand the number of charging stations across the country.

Iceland has been a world leader in the push for renewable energy, with over 85% of its electricity coming from renewable sources. The government’s move to subsidize electric cars for rental companies is just the latest step in the country’s efforts to be carbon neutral by 2040.