Need for fair play

The demand for electric vehicles, or EVs, has grown significantly, as evidenced by the substantial volume of sales last year.

According to the International Energy Agency (IEA), global electric car sales reached 17 million in 2024, rising by more than 25 percent. In fact, more than 20 percent of new cars sold worldwide were electric.

The additional 3.5 million cars sold in 2024, compared to 2023, already exceed the total electric car sales in 2020, the IEA noted.

China maintained its lead among major markets, with electric car sales exceeding 11 million. Around one in 10 cars on the road in China is electric, compared to one in 20 in Europe. Almost half of China’s car sales were electric in 2024, representing approximately two-thirds of the electric cars sold globally, with electric vehicle sales in the country increasing by around 40 percent.

The IEA also reported that by the end of 2024, the electric car fleet had reached nearly 58 million, accounting for approximately four percent of the total passenger car fleet and more than tripling the total electric car fleet in 2021.

The global stock of electric cars displaced over one million barrels per day of oil consumption in 2024, the agency added.

Meanwhile, emerging and developing economies in Asia, excluding China, saw a significant increase in electric car sales, reaching almost 400,000 in 2024, up by 40 percent from 2023, according to the IEA. Thailand remained the largest EV market in Southeast Asia despite a 10-percent drop in electric car sales, which is smaller than the 24 percent drop in conventional car sales. The share of EVs in Thailand’s total car sales rose to 13 percent in 2024 from 11 percent in the previous year. Indonesia and Vietnam tripled and nearly doubled their sales numbers, respectively, while in Malaysia, electric car sales more than doubled in 2024.

This year, the IEA revealed that electric car sales had already increased by 35 percent in the first quarter compared to the same period in 2024. More than four million electric cars have already been sold compared to over one million in the same period in 2024, with China averaging monthly sales of around 875,000 electric vehicles.

For the whole of 2025, the IEA expects global electric car sales to increase by 25 percent, similar to the growth rate in 2024, with sales expected to surpass 20 million worldwide. China hopes to sell over 14 million electric cars this year.

For its part, BloombergNEF’s Electric Vehicles Outlook anticipates nearly 22 million global passenger electric and plug-in hybrid vehicle sales this year, as the cost of lithium-ion batteries declines and production of more affordable EV models increases.

The World Economic Forum, in a report, said that it expects EVs to reach 25 percent of global car sales this year.

Here in the Philippines, the EV industry has been growing significantly, especially with the passage of the Electric Vehicle Industry Development Act (EVIDA) or Republic Act 11697. The law outlines the regulatory framework and creates a comprehensive roadmap for the operation of EVs in the country.

Enacted in 2022, the law aims to promote the widespread adoption of EVs in the Philippines and to foster the growth of the EV industry. It establishes financial incentives for both consumers and manufacturers, such as tax breaks and subsidies, to encourage EV adoption.

Data from the Land Transportation Office showed the growing momentum of EV adoption, with 29,715 EVs registered from January to July 2025, already surpassing the full-year total of 24,286 in 2024.

As of the middle of this year, EVs already represent nearly five percent of new vehicle registrations, or three times the share recorded in 2023, according to one report.

Early this month, the Department of Energy issued a harmonized EV classification system to reinforce the country’s commitment to a cleaner, more sustainable, and future-ready transportation sector.

Department Circular DC2025-09-0015, which took effect on Sept. 20, 2025, amends the EV Recognition Guidelines under DC2023-05-0012 and establishes a consistent, comprehensive framework for classifying EVs.

The updated circular introduces a harmonized EV classification system with detailed categories for Battery EVs (BEVs), Hybrid EVs (HEVs), Plug-in Hybrid EVs (PHEVs), Light EVs (LEVs), Range-Extended EVs (REEVs), and Fuel Cell EVs (FCEVs). There are now six classifications of EVs in the Philippines compared to the previous four (BEVs, HEVs, LEVs and PHEVs).

There are, however, disturbing reports that a certain PHEV from a leading China brand importer is being classified as a BEV, despite being entirely different.

PHEVs combine an internal combustion engine (ICE) with a rechargeable battery, allowing external charging but still relying partly on fossil fuels. BEVs, in contrast, run solely on electricity from a large battery and require external charging, producing zero tailpipe emissions.

Under both the TRAIN Law and EVIDA, BEVs are exempt from excise tax as part of the government’s effort to promote fully clean transport technologies. PHEVs, since they still burn fuel, do not qualify for the same incentive. Hybrid vehicles are subject to excise tax at 50 percent of the otherwise applicable rate.

The Bureau of Internal Revenue determines whether a vehicle is exempt from excise tax or subject to the 50 percent recent excise tax based on the DOE’s list of recognized electric vehicles published on its website, without prejudice to the BIR’s authority to conduct post-verification assessment of the automobiles.

If a PHEV is indeed being misclassified as a BEV, this not only undermines the law but also grants the company an unfair tax advantage over competitors who comply with proper classifications and pricing. Given the clause in the new DOE circular requiring all recognized EVs to reapply to maintain their classification under the harmonized system, there is hope that this misclassified vehicle will be reassessed and finally categorized correctly.

The DOE should thoroughly investigate the matter. After all, the BIR merely relies on DOE’s classification. Even the most carefully designed rules can be bent or circumvented, which is why clear enforcement and strict penalties for violators are essential. Ensuring fair play in the EV market is crucial not only to uphold the spirit of the law but also to maintain a level playing field that rewards innovation, compliance and genuine sustainability.

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