Do electric-car incentives still make sense in Portugal?

Electric-car incentives have an explicit purpose: to make a technology that remains expensive available to more people. There is just one issue. Looking at sales figures, those buying electric cars do not appear to be seeking out the cheapest options.

More affordable electric models have started to arrive, with offerings priced at €25,000 or less. Yet these are not the cars leading the sales charts - far from it. Between January and July, the Tesla Model 3 was Portugal’s best-selling electric car, and its entry-level version currently costs €36,990. Is that competitive for what it offers? Yes. Is it inexpensive by Portuguese standards? No.

The table below lists Portugal’s 10 best-selling electric cars so far this year, up to July:

Read without context, however, this table tells the wrong story. After all, roughly 70% to 75% of new-car sales in Portugal go to companies, fleets and sole traders. For electric vehicles, that share is estimated to rise to between 80% and 85%.

That explains a large part of this Top 10. It also makes the question that truly matters more relevant: do we really need incentives?

Do we really need to pay people to buy electric cars?

In my view, no. In fact, I do not believe the state should offer financial incentives for buying cars, regardless of their powertrain.

Electric cars are exempt from ISV and IUC, Portugal’s vehicle purchase and annual circulation taxes, while their running costs can be substantially lower. Businesses also benefit from even more significant tax advantages. The market has already received that signal and is responding.

Adding further public money on top of those advantages is like continuing to push a door that is already open.

The latest round of support opened in June: €4,000 for private buyers purchasing a new electric car, provided it fell within the specified price limits and they scrapped a combustion-engined car more than 10 years old. The funding allocated to private buyers of passenger cars was exhausted in under two hours, covering 1,375 incentives in total.

Many will call that a success, but it represents only a small share of a market that has already exceeded 40,000 units. I do not see it as an argument for further incentives. Instead, it is a reason to ask whether, if the money is available, it could achieve far more elsewhere.

Incentivising fleet renewal rather than a technology

Portugal has decarbonisation targets to meet. The National Energy and Climate Plan 2030 (PNEC 2030) sets out a 40% reduction in transport emissions compared with 2005.

However, focusing a decarbonisation and fleet-renewal policy solely on new cars overlooks the scale of the overall market. Around 860,000 used cars changed hands in 2025, compared with 225,039 new vehicles. That is almost four used cars for every new one.

Electric cars are already gaining ground in this segment. In just two years, their share of used-car sales increased from 6.67% to 16.35%. Roberto Gaspar, secretary-general of ANECRA, recently told Razão Automóvel that it will mainly be through used cars that electric mobility can become accessible to a much larger proportion of families.

That makes sense. New electric cars costing under €25,000 - and even under €20,000 - are finally arriving, but their prices still require compromises in space, range or versatility. They cannot always effectively replace a 15- or 20-year-old diesel family car that does everything, and which many households keep because they cannot afford another vehicle.

In the used market, the same budget can already secure larger electric cars, with more practical ranges and greater potential to genuinely serve as a household’s only car.

As currently applied, the incentive programme already includes an important part of this equation: receiving support requires handing in a combustion-engined car more than 10 years old for scrappage. That is sensible.

What appears less logical is making that objective conditional on purchasing a new electric car. If the aim is to remove the oldest, most polluting and least safe cars from the roads, why not target the incentive precisely at that outcome?

A three- or four-year-old used electric car could meet that aim. A recent hybrid could as well. Even a modern combustion-engined vehicle could be a major step forward compared with the 20-year-old car it replaces. Although the CO₂ benefit may be smaller, there would be significant reductions in other pollutants - discussed far less often, but with a direct effect on human health.

Naturally, it would not have the same decarbonisation impact as switching to an electric car. But it could be an option within reach of far more families, while taking a far more polluting, less efficient and less safe vehicle off the road.

Perhaps the incentive is too concerned with the car coming in, and not concerned enough with the car going out.

Waiting for the next electric-car incentive programme

To be clear, this is not an argument in favour of incentives. I still believe the state should not subsidise car purchases. Electric cars already enjoy important tax advantages, and the market is responding without requiring another push.

But if the state chooses to spend public money on decarbonising and renewing the vehicle fleet, it can certainly use it more effectively. It may make more sense to help more people replace their cars than to help fewer people buy a new electric car as a condition of support.

For now, no new incentive programme has been confirmed. If support returns, it may be worth reversing the logic: start with the vehicle we want removed from the road, then decide what may take its place.

New electric cars have already found their buyers. What remains is reaching those who have never been close to buying a new car.