Tashkent, Uzbekistan (UzDaily.com) — The increase in the recycling fee for electric vehicles in Uzbekistan is aimed not only at addressing environmental concerns but also at creating facilities for battery and waste processing. This was stated by Inomjon Abdurakhmanov, head of the Foreign Trade Department of the Ministry of Investments, Industry, and Trade of Uzbekistan, in a Facebook post.

In recent days, this issue has been actively discussed on social media, particularly in the context of the decision to equalize, starting from 1 May 2025, the recycling fee for electric vehicles with the rates applied to hybrid cars. According to Cabinet of Ministers Resolution No. 52 from 31 January 2025, the recycling fee for electric vehicles up to three years old has been increased from 30 to 120 sizes of the base estimated value (BEV), while for electric vehicles older than three years, the fee has risen from 90 to 210 sizes of the BEV.

Experts, financial analysts, and bloggers have expressed differing opinions on this matter. Some view the decision as an infringement on consumer rights, while others associate it with support for domestic manufacturers, job creation, and export development. At the same time, negative and unfounded statements aimed at attracting public attention have been spreading online.

As Inomjon Abdurakhmanov pointed out, the recycling fee is one of the instruments of foreign trade regulation and is intended to ensure environmental safety, protect public health, and mitigate the harmful impact of decommissioned vehicles on the environment. Furthermore, this measure contributes to the development of the country’s industrial sector and supports local manufacturers.

He recalled that in order to stimulate electric vehicle production in Uzbekistan, Presidential Decree No. PP-443, which has been in effect since 19 December 2022, exempts electric and hybrid vehicles manufactured in the country from the recycling fee until 1 January 2030. This benefit is available to all investors and manufacturing enterprises and is not limited to specific entities. The primary goal of this initiative is to provide consumers with locally produced electric vehicles, given the growing demand for EVs and hybrids.

Abdurakhmanov emphasized that electric vehicle batteries contain toxic substances, including mercury, nickel, cadmium, lead, lithium, manganese, and zinc. These elements, particularly heavy metals, can accumulate in the human body and pose serious health risks.

The import of electric vehicles into Uzbekistan has been rapidly increasing: 809 units were imported in 2021, 2,180 in 2022, 16,084 in 2023, and already 24,095 in 2024. According to forecasts, by 2035, more than 10,000 tons of used batteries will be generated annually, requiring proper recycling.

The ministry representative also noted that establishing enterprises for battery and waste recycling will require significant financial investment and at least 10 to 15 years to develop. In this context, raising the recycling fee is seen as an important step toward building a sustainable recycling system and protecting the environment.

Many countries worldwide support domestic electric vehicle manufacturers through tax and customs incentives, as well as various non-tariff regulatory measures, including duties, quotas, restrictions, certification requirements, and environmental standards.

As Abdurakhmanov highlighted, numerous foreign countries, including Belgium, Norway, Germany, Denmark, Kazakhstan, Russia, and Belarus, impose vehicle recycling fees, environmental taxes, and related charges, with total amounts reaching up to US$12,125. Additionally, nearly all countries apply import duties on electric vehicles, whereas in Uzbekistan, this rate remains at 0%.

For comparison, the level of import duties on electric vehicles varies significantly across different countries: in India, it reaches 125%, in the European Union 55%, in Türkiye and Indonesia 50%, in the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia) 15%, and in China 15%. Currently, about 90% of all electric vehicles in the world are produced in China.

For instance, if we calculate the cost of a new Chinese-made electric vehicle with a customs value of US$20,000 (excluding transportation costs), the final price for consumers in different countries is as follows:

In the EU, considering a 55% import duty, 15% VAT, and a US$200 recycling fee, the total cost would be US$34,200.

In Russia, factoring in a 15% import duty, an excise tax of US$2,600, a recycling fee, and 20% VAT, the final price would be US$29,600.

In Uzbekistan, where there is no import duty, with 12% VAT and a recycling fee of US$3,500 (120 BCV), the final cost would be US$25,900.

Thus, Uzbekistan remains one of the countries where electric vehicles remain relatively affordable for consumers.

Uzbekistan’s automotive industry employs over 30,000 people, while more than 200,000 specialists work in related sectors. According to forecasts, in the next five years, the number of people employed in the automotive industry could increase to 40,000, with related sectors expanding to 260,000 workers. Notably, more than 15% of industry employees are highly qualified specialists.

According to Inomjon Abdurakhmanov, the automotive sector has a significant multiplier effect: one job in the automotive industry helps create 7–8 new jobs in other industries, including metallurgy, chemical production, electronics, and services.

In 2024, the turnover of Uzbekistan’s automotive sector reached US$5.6 billion. The industry contributed 10.1 trillion soums in taxes to the national budget and ranked among the country’s largest taxpayers, securing seventh place among enterprises with state participation.

Given the high level of global competition, maintaining the sustainable development of the automotive industry and preserving over 30,000 jobs requires swift and decisive measures.

In his post, Inomjon Abdurakhmanov provided a detailed analysis of the development of Uzbekistan’s automotive industry and the impact of the new utilization fee rates on this sector.

In his view, these measures primarily support domestic manufacturers and help create a healthy competitive environment. Uzbekistan is home to several automotive plants, including GM Uzbekistan in Andijan, ADM Jizzakh in Jizzakh, and Asaka Motors in the Syrdarya region.

Secondly, regulatory changes in the industry foster favorable conditions for attracting foreign investors interested in implementing projects to produce vehicles that are in demand on the global market.

Thirdly, special attention is being given to expanding the model range of local automakers, improving quality, and enhancing the safety standards of manufactured vehicles.

While low import duties on foreign-made vehicles make them more affordable for the population, Abdurakhmanov notes that in the medium to long term, this could trigger a crisis in the domestic automotive industry, leading to increased unemployment and weakening the national economy.

Another important factor is Uzbekistan’s geographical position. As a landlocked country, transporting goods requires crossing the territories of at least two other states. Under these conditions, high transportation and logistics costs make it challenging to attract large investors with advanced technologies without offering them certain incentives.

A representative of the ministry cited examples of automotive industry development in other countries, highlighting Türkiye as a particularly successful case.

According to him, the evolution of Türkiye’s automotive sector occurred in four key stages:

1960–1970s: The first automobile factories were established, and protective measures were introduced for the domestic market. Local vehicle production began to replace imported models. The import of components was strictly regulated, while high tariffs—and later a complete ban—were imposed on finished vehicle imports.

1981–1990s: The industry underwent liberalization and expanded production by adopting new technologies. Between 1991 and 1995, Türkiye began exporting its automobiles, introduced export subsidies, created free economic zones, and implemented tax and customs incentives for component manufacturers.

From 1996: The sector became fully integrated into the global economy, achieving stable competitiveness. This period saw the signing of a free trade agreement with the European Union and the introduction of a law to attract foreign direct investment.

Since 2015: Türkiye has engaged in strategic partnerships with leading global automakers. In 2024, Turkish automobile exports reached US$37.2 billion, with US$25.3 billion (68.2%) going to EU countries. Today, over 500,000 people are employed in Türkiye’s automotive industry.

In addition to positive examples, Abdurakhmanov also pointed out unsuccessful cases.

Australia: In the 1970s, the country’s automotive industry employed around 90,000 people, producing 500,000 cars annually. However, during the 1980s and 1990s, the government gradually reduced protective tariffs—from 57.5% to 45%, then to 35% (1992), 15% (2000), 10% (2005), and finally to 5% by 2010. This dealt a severe blow to domestic automakers. As a result, major companies such as Ford, Toyota, and GM Holden announced the closure of their plants in Australia between 2013 and 2014.

New Zealand: The country’s auto assembly industry had thrived due to protective tariffs and import restrictions. However, in the 1980s, tariffs were lowered, leading to the complete shutdown of local vehicle manufacturing by the late 1990s. Factories in Petone (1984), Trentham (1990), and Porirua (1987) closed down, followed by Ford (1997), Toyota, Nissan, and Honda (1998).

Thus, global experience demonstrates that without proper regulation and support, national industries may decline, leaving countries dependent on imported vehicles.

Inomjon Abdurakhmanov also commented on the compliance of the utilization fee with WTO regulations.

"First of all, amending customs duties does not contradict WTO rules. Abandoning existing tariff and non-tariff instruments without WTO membership could lead to increased imports and slower GDP growth," stated Inomjon Abdurakhmanov.

Secondly, he added, the WTO recognizes the concept of "other duties and charges," which includes the utilization fee.

According to him, when a country joins the WTO, it can include such fees in its final commitments package through negotiations with member states.

As of today, Uzbekistan has completed negotiations with 23 countries as part of its WTO accession process.

Abdurakhmanov clarified that aligning national legislation with WTO regulations is not coordinated bilaterally with WTO member states but is discussed with the WTO Secretariat during the approval of the final commitments package at the last stage of accession.

Some obligations outlined in the final agreements may include a transition period, he emphasized.

"Developing countries always strive to improve public welfare by supporting high-value-added sectors or implementing structural reforms," noted Abdurakhmanov.

He stressed that as part of this process, the government may apply certain protectionist measures, including strengthening tariff and non-tariff barriers.

Industrialization is one of the key areas of structural economic transformation, he added.

Abdurakhmanov pointed out that in international practice, early-stage industrial growth policies were closely linked to trade policy. For instance, India strictly protected its textile and automotive industries in the early phases of development.

"The U.S. is one of the world’s most protectionist countries, actively imposing import duties. Protectionism advocates argue that raising customs duties is necessary to safeguard ‘infant’ industries, create jobs, preserve sectors critical to national security, and protect consumers," the ministry representative emphasized.

A striking example is the introduction of import duties of up to 100% on Chinese-made electric vehicles by the U.S. in May 2024 and by Canada in October 2024.

"Making statements that lack economic justification and create the illusion of consumer protection—without understanding the rationale behind decisions aimed at national development and improving public welfare—is unreasonable," Abdurakhmanov added.

Additionally, the Ministry of Investments, Industry, and Trade has established a Public Council, where any economist, expert, blogger, or activist can submit inquiries. Contact phone numbers and an email address are available on the ministry’s official website (miit.uz).

Overall, the head of the foreign trade department believes that fully opening Uzbekistan’s market to foreign automobiles today would lead to unemployment, a weak economy, and dependency in the future.

Therefore, in his opinion, it is necessary to support domestic manufacturers without creating a monopoly and to continuously improve the quality of locally produced vehicles so they can compete with imported models.

It is also crucial to establish a domestic research and development base to ensure the industry’s sustainable and long-term growth.