On 1 October 2019, the Mexican Congress published an initiative that aims to reform a series of laws relating to tax, federal transit and transportation, and climate change. The purpose of the initiative is to address an environmental issue in Mexico: there are 40 million cars responsible for over 25% of the country’s total Co² emissions and consumption of over 45% of the energy available in the country.

The initiative will reform the General Law for Climate Change which establishes the legal standards that will be the cornerstone for the other reforms. The proposed reforms will place obligations on the administrative authorities to promote and incentivize the use of any type of hybrid and electric vehicles, such as Simple Hybrid Electric Vehicles (or ‘HEVS’), Pluggable Hybrid Vehicles (or ‘PHEVS’), Battery Electric Vehicles (or ‘BEVS’) and BEVS with Range Extenders (or ‘BEVS+RE’).

Additionally, the initiative intends to reform the Revenue Tax Law in order to allow buyers of HEVS, PHEVS, BEVS or BEVS+RExs vehicles to deduct their purchase from their annual tax return.

Regarding Value Added Tax, the initiative aims to make the aforementioned vehicles more attractive to consumers than vehicles with internal combustion engines by setting a 0% tariff on the sale, purchase and acquisition of HEVS, PHEVS, BEVS or BEVS+REx vehicles.