Working Paper

Spain’s booming hybrid electric vehicle market: A summary of supporting policy measures

Electrification Strategies

Spain is one of the strongest hybrid electric vehicle (HEV) markets in Europe in terms of total sales volumes and relative European market shares. This paper reviews how programs, regulations, and incentives at the national, regional, and local level have shaped the HEV market in the country.

The transition to HEVs in Spain is driven largely by a series of regulations and incentives. The Spanish national government, as well as regional and local authorities, implemented a range of measures—including financial incentives, low-emission zones, and awareness-raising campaigns—to spur the uptake of alternative fuel vehicles across all market sectors. At the same time, gasoline and diesel vehicles with high emissions have been gradually subject to higher tax levels or total bans from inner-city low-emission zones. In addition, the HEV market benefited from the decreasing sales of diesel cars in the aftermath of the diesel scandal.

Over the past three years, regional and local authorities have been the main agents of growth in the Spanish HEV market. This is supported by the continued increase in hybrid sales after the end of the last national incentive program. For example, the autonomous community Madrid, which made up 40% of all HEV sales in Spain in 2018, has incorporated a mix of measures such as tax benefits, financial incentives on car purchase targeting specific user-groups, and reduced road tolls and parking fees, all reducing a vehicle’s cost of acquisition and ownership. In addition, HEVs have prioritized access to new low emission zones.

The Spanish HEV market development shows that despite the lack of high tax advantages for HEVs, national and particularly regional and local incentive programs reducing the acquisition and ownership costs as well as preferential access to restricted urban areas can have a strong influence on consumers’ purchase decisions in favor of a HEV.

HEV use in Europe