A.16 PASSENGER ELECTRIC MOBILITY IN TÜRKIYE

Country Typology

Vehicle fleet composition: Car dominant

Net oil trading status: Importer

Relative cost of vehicles: High

The dominant vehicle type in Türkiye is cars (80.3 percent), followed by buses (13.4 percent), and two-wheelers1 (6.3 percent) (OICA 2020; Turkish Statistical Institute 2020). Electricity is primarily generated from fossil fuels (66.7 percent), including gas (37.3 percent) and coal (28.6 percent), and to a lesser extent from renewable sources (33.3 percent), notably hydro (20.5 percent) and wind (6.8 percent).2 The national policies and plans related to electric vehicle uptake include an automotive support program to improve domestic production capabilities in sensors, batteries, fuel cells, and software; development of a workforce capable of adapting digitalization and technological development; development of national production and research and development activities in the automotive industries; establishment of effective infrastructure for vehicles with alternative power systems; increased investment in the battery sector for electrical automotive production; and the increased use of domestically manufactured electrical buses in urban and suburban transportation (Presidency of Strategy and Budget, Presidency of Republic of Turkey 2020). From the power sector perspective, the electric vehicle strategy includes the adoption of cost-based pricing practices in the electricity and natural gas markets; introduction of nuclear-based power plants in the country; reduction in imported sources of electricity generation; integration of renewable energy generation facilities into the grid; and reducing the use of natural gas in electricity generation and increasing the use of renewable sources from 33 percent to 39 percent by 2023. A series of incentives were introduced (Saygin et al. 2019): reductions in Special Consumption Tax rates were introduced in 2016 for electric vehicles with electric engine power of greater than 50 kilowatts (and cylinder volume greater than 1,800 square centimeters) and greater than 100 kilowatts (and cylinder volume greater than 2,500 square centimeters), from 90 percent to 45 percent and from 145 percent to 90 percent, respectively. According to the Turkish Statistical Institute, the number of electric vehicles registered in Türkiye reached 15,000 in 2019 (TRTWorld 2021). The domestic electric vehicle manufacturing industries are growing in Türkiye. A factory in Gemlik that has an annual capacity of 175,000 units launched production in 2022 (Wikipedia 2023). The domestic car project named Automotive Joint Venture Group (TOGG), which is a joint venture between Anadolu Group, BMC, Kök Group, Turkcell, Zorlu Holding, and TOBB, kick-started in 2019 (TRTWorld 2021).

Türkiye faces many conditions that are less favorable toward electric mobility, including a car-dominated fleet and relatively high-cost vehicles, notwithstanding oil-importing status (figure A.16.1a). Although electrification of transportation does not yet look economically favorable as a national strategy (table A.16.2), this is largely driven by the fact that the electrification of four-wheel vehicles is not attractive under current conditions, given significant (and unaffordable capital) cost differentials (table A.16.1). By contrast, there is a strong case for adoption of twowheel electric motorbikes (figure A.16.1b), which present a life-cycle cost advantage of about 7 percent (or 17 percent in financial terms). However, the percentage capital cost differential for electric two-wheelers is relatively high at over 40 percent and represents almost 3 percent of gross national income per capita, suggesting an affordability barrier in the absence of finance. Furthermore, electric buses also offer modest economic advantages on the order of 4 percent of life-cycle cost and are only 20 percent more expensive in capital cost terms. Across all vehicle categories, the fiscal regime offers a 21 percent reduced tax incentive for the purchase of electric vehicles.

The externality benefits of electric mobility in Türkiye are relatively small (figure A.16.1c), except for local externalities associated with buses that are very large (figure A.16.1d). Otherwise, fuel cost savings are the main advantage associated with electric mobility in Türkiye, further accentuated in financial terms by a fiscal regime that taxes gasoline and diesel at 50–100 percent. Thus, the overall case for electric mobility in Türkiye looks better in financial than in economic terms (figure A.16.1a).

The total investment needs associated with the 30×30 scenario amount to US$3.4 billion per year by 2030 (or 0.3 percent of Turkish gross domestic product). About two-thirds of the required outlay is associated with the incremental capital cost of four-wheel electric vehicles (figure A.16.2a). In terms of public investment, the most significant items are the additional capital cost associated with electric buses, as well as the provision of public charging infrastructure for private vehicles (figure A.16.2a). Implicit carbon prices associated with electric two-wheelers and buses in Türkiye are negative, but that price exceeds US$4,000 for four-wheelers (table A.16.3). As a result, there is little scope to cover investment needs through carbon financing arrangements (figure A.16.2b).

The overall economic case for electric mobility in Türkiye is negative, and this does not change even with further decarbonization of the power grid (“green grid” scenario), let alone under more conservative assumptions about the cost of batteries (“scarce minerals” scenario) and the fuel efficiency of internal combustion engines (“fuel efficiency” scenario). On a positive note, the emerging advantage associated with electrification of buses can be hugely increased through the more efficient procurement and operation of vehicles (“efficient bus” scenario). However, there is no real case for electrification of four-wheelers, even when it comes to taxi fleets and other intensively used vehicles (“taxi fleet” scenario). It is clear that electric mobility in Türkiye needs to prioritize the two-wheel segment of the fleet and work to further enhance the advantages of electric buses.

Figures and tables start on the next page.

Figures and Tables

a. Cost advantage: Typology benchmarking b. Cost advantage: Vehicle type

Local

Note: Data in this figure represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides.

TABLE A.16.1 Cost advantage of accelerated EV adoption in Türkiye, 2030

Note: Heading colors: blue = excluding taxes and subsidies, gray = fiscal wedge, green = including taxes and subsidies. 2W = two-wheeler; 4W = four-wheeler; “Local externalities” comprises local (NOx, PM10, SOx) air pollution costs. “Global externalities” comprises global (CO2) air pollution costs. CO2 = carbon dioxide; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides. Red and parentheses indicate negative value.