28 June 2022
Promoter – Financial Intermediary
AUTONOM SERVICES SA
The project concerns the financing of electric and low emission vehicles for operational leasing or rent-a-car activities in Romania.
Additionality and Impact
The project concerns the roll-out of a fleet of low emission vehicles with the goal of reducing road transport CO2 emissions.
The project contributes to the EIB's objectives of sustainable and decarbonised road transport thereby supporting EU policy objectives. The project is consistent with the EU Green Deal and the Sustainable and Smart Mobility Strategy as well as the Bank's Climate Bank Roadmap and Transport Lending Policy.
The project has a 100% share of Climate Action and is eligible under Article 309 point (a) projects for developing less-developed regions and point (c) common interest.
The Electric Vehicle (EV) market is at an early stage of development in Romania with significant operational performance uncertainty and high upfront costs. The EV market is subject to network effect and depends upon the size and availability of the associated public EV charging network, which is at a very early stage in Romania.
The main goal of the project is to accelerate the transition towards low emission and electric vehicles (EV) and it fits within a wide range of European policy measures aimed at achieving a more sustainable and lower carbon emissions transport sector.
Significant barriers to EV mass-market uptake remain, the vehicle costs being a major one. Despite an increase in EV (and batteries) production resulting in lower production costs, EVs remain more expensive than conventional Internal Combustion Engine (ICE) vehicles. Price parity between EV and ICE is expected around 2025. On a usage basis, however, EVs are already expected to have a total cost of ownership (TCO) lower or equivalent to ICE vehicles due to expected lower maintenance, tyre replacement and electricity costs. Leasing companies have the expertise and experience to price maintenance and energy use with sufficient confidence, and can already today offer competitive long-term rental contracts for EV against ICE vehicles. However, the residual value (RV) has a major impact on the financial viability of the rental contracts and remains today very uncertain given that the market is still at an early stage and the second hand market for EV is not mature yet. The more positive view on the market, the higher the RV and the more competitive are EV rental costs against ICE, yet the riskier is the leasing company position because it would be more difficult to sell the vehicle at this higher value.
By supporting leasing companies to increase their EV offer (and indirectly bear part of the EV residual value risk), EIB financing plays a very significant role in accelerating EV deployment and EV EU market share, hence supporting the industry to produce at larger scale and reduce EV costs.
This project contributes to the deployment of alternative fuels, thereby contributing to reducing not only the negative environmental externalities of road transport, in the form of the reduction of CO2, air pollutants (Nitrogen Oxides, Particulate Matter), but also the fuel consumption costs for transport operators ? mostly Small and Medium Enterprises ? and consumers.
EIB would provide an adequate financing to the borrower, allowing it to further diversify its financing sources. The Bank's tailor-made product would provide the company with a longer maturity than the ones available on the market and more aligned with the expected lifetime of the project. The EIB's contribution to this investment is expected to materially contribute to the Promoter's effort to meet its ESG targets and crowd-in Green Finance investors. EIB's financing would also provide a signaling effect on the soundness and quality of the project, facilitating funding from commercial banks.
The main goal of the project is to accelerate the transition towards zero emission road transport. The project will generate substantial environmental economic benefits in terms of reduced greenhouse gas emissions, air pollution and noise. The project will also contribute to support the development of the cleaner automotive industry through the accelerated deployment of electric vehicles and, indirectly, their associated infrastructure. Finally, this project addresses the sub-optimal investment situations associated with imperfect competition and incomplete markets by contributing to increase the level of competition and enable the development, adoption and scale-up of electric vehicles. The Promoter has significant experience in the sector and is subject to national regulation of its current activities.
- Administrative and support service activities
Proposed EIB finance (Approximate amount)
EUR 15 million
Total cost (Approximate amount)
EUR 32 million
The new vehicles are expected to be much cleaner than market average. Significant benefits in terms of fuel consumption, reduced pollution and carbon emissions are expected and will be further assessed during appraisal. The acquisition of vehicles does not fall under Annex I and II of Directive 2014/52/EU amending 2011/92/EU. Nevertheless, all environmental, issues including possible environmental and operational authorisations will be reviewed during the due diligence process.
The Promoter has been assessed by the EIB as being a private company not subject to EU rules on public procurement or concessions. However, if after the project appraisal, the EIB were to conclude that the Promoter is after all subject to EU public procurement legislation Directive 2014/25/EU, where applicable, then the Bank would require the Promoter to ensure that contracts for the implementation of the project will be tendered in accordance with the relevant applicable EU procurement legislation 2014/25/EU, where applicable, as well as Directive 92/13/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the Official Journal of the EU, as and where required.
Signed - 26/09/2022