Iran has recently made moves to improve air quality with hybrid vehicles, such as Iran Khodro’s Runna plug-in hybrid. Industrial Development and Renovation Organization of Iran has also sponsored a “National hybrid car project.” Iran’s automobile industry makes up ten percent of the country’s gross domestic product, and is second only to its oil industry. Under former president Mahmoud Ahmadinejad, automotive import duties increased as much as 90 percent in 2013. Experts blame this for lower quality vehicles from Iran’s domestic automakers, including Iran Khodro, Pars Khodro, and Saipa.
Doing away with the tariffs is expected to foster competition and bring a higher level of quality back to the Iranian automotive industry. Some fear, though, that these lower duties could do more to hurt Iran’s automotive sector, which could be trampled by larger, more established international competitors. Iranian automakers are asking for a continuation of the high tariffs, as well as a bailout for the ailing sector, which owes as much as $4 billlion in debt.
Iran’s automotive industry is rife with uncertainty, to be sure, but the eliminating tariffs on EVs and hybrids could help predict the trajectory of the country’s car market should things play out the way they are currently planned. It could also have the additional benefit of positively impacting air quality in places like Tehran.
