The government subsidy on the purchase of electric vehicles will be retained next year, but it is being reduced to a maximum of €8,000 per car from the current limit of €11,000, Finance Minister Clyde Caruana announced in the Budget speech on Monday.
The measure, which was not unexpected, is the result of "momentum" in the sale of electric vehicles, the minister told reporters in a budget briefing before delivering his speech in parliament.
"We want to ensure that as more people buy electric vehicles, the available subsidies will be enough for everyone to benefit," he said.
He stressed however that all those who had signed a purchase contract up to Monday (today) would receive the current subsidy in full.
The subsidy for electric motorcycles will be €2,000.
Times of Malta reported on September 16 that the Association of Car Importers Malta (ACIM) has not been given any guarantees that the grants scheme for the purchase of new electric vehicles would continue into 2025.
A kitty worth almost €50 million of EU funds, made available through the Recovery and Resilience Plan and issued in tranches of €15 million annually, was consumed over a period of three years between 2022 and 2024.
From next year the subsidies will come from national funds.
Malta has been offering EV subsidy schemes for almost a decade.
Originally, plug-in-hybrid cars were eligible for subsidies as well. These were removed fairly recently while the grants on fully electric vehicles increased significantly.
In reducing the subsidies to EV vehicles, Malta is now following a trend seen in several other countries.
But concerns have been raised that the reduction and even the elimination of the subsidies abroad had caused a sharp drop in EV vehicles.
Last month, European carmakers asked the EU for "urgent" assistance as they contend with slumping electric vehicle sales and stricter emissions regulations due next year.
In a formal request to Brussels, the European Automobile Manufacturers' Association asked "EU institutions to come forward with urgent relief measures before new CO2 targets for cars and vans come into effect in 2025".
Europe has been racing to produce more EVs as part of its green transition, with the clock ticking on an EU deadline to phase out the sale of fossil fuel-burning cars by 2035.
But after years of growth, electric car sales began falling at the end of 2023, and now account for just 12.5 percent of new cars sold on the continent.
Malta has also seen a drop in EV sales, but observers said that could be explained by the ban on rental electric scooters and restrictions on the recruitment of foreign workers by cab operators, which in turn led to those companies ordering fewer new vehicles.