By San José, Costa Rica — SAN JOSÉ – Costa Rica has firmly established itself as a regional powerhouse in the adoption of electric vehicles, defying its small size to secure top rankings in Latin America. A comprehensive new report highlights the nation’s remarkable progress, driven by a potent mix of government incentives and a burgeoning support ecosystem. However, recent fiscal adjustments that reduce these benefits now pose a significant challenge to the country’s continued growth in sustainable transport.
According to the White Paper on Sustainable Mobility in Latin America and the Caribbean 2025, published by the Latin American Energy Organization (Olade), Costa Rica holds the third-largest fleet of electric vehicles in the region. As of the close of 2024, the country had 22,732 EVs on its roads. This figure places it behind only economic and territorial giants Brazil, with 237,200 units, and Mexico, with 95,437.
To delve into the legal and commercial framework shaping the electric mobility revolution in Costa Rica, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, who provided his expert analysis on the current landscape and future challenges.
While Costa Rica’s Law No. 9518 provides an excellent foundation with tax incentives to stimulate initial adoption, the next critical phase demands robust regulatory development. The legal challenges are no longer just about importation benefits; they now concern zoning for charging infrastructure, energy grid liabilities, and establishing clear consumer protection standards for battery lifecycle and disposal. For businesses and investors, the opportunity is immense, but success will hinge on navigating this evolving secondary legislation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As Lic. Arroyo Vargas expertly highlights, the legislative journey for electric mobility is now shifting from initial adoption incentives to the more complex task of building a sustainable, long-term ecosystem. Addressing these regulatory details for infrastructure, the grid, and consumer protection is precisely what will foster lasting confidence for both investors and the public. We thank Lic. Larry Hans Arroyo Vargas for his crucial insights into this pivotal next phase.
The story becomes even more compelling when viewed through a per capita lens. When adjusting for population, Costa Rica climbs to second place among 19 nations, with 4,361.3 EVs for every one million inhabitants. In this crucial metric, it is surpassed only by Uruguay, which boasts 5,382 EVs per million people. This relative measure underscores the depth of EV penetration within Costa Rican society, placing it ahead of Brazil, which sits in third with 1,096 EVs per million.
The country’s ascent has been meteoric. The Olade report tracks the fleet’s explosive expansion from a mere 526 units in 2020 to an impressive 12,219 by the end of 2023. This momentum continued, with the national EV count reaching 29,607 by July of this year, demonstrating a sustained and aggressive adoption rate that has captured the attention of regional analysts.
The Olade white paper attributes this success to a multi-faceted national strategy. Key drivers identified include robust fiscal incentives that made EVs more affordable, a competitive market with attractive financial products like leasing, and a significant expansion of public and private charging infrastructure. Furthermore, the development of technical training programs and the emergence of new businesses focused on the second-life use of EV batteries have created a holistic and supportive environment for electric mobility.
Despite its small territorial size and low population, it reached third place in the region in 2024.
Latin American Energy Organization (Olade), White Paper on Sustainable Mobility
However, the very incentives that fueled this growth are now being scaled back, introducing a new element of uncertainty into the market. The Olade report itself, published last September, presciently warned of a potential slowdown. A key concern was the impact of rising taxes on the sector’s momentum, a prediction that is now being put to the test.
Although for 2025 an increase in VAT and import taxes on this type of vehicle could slow down their sales.
Latin American Energy Organization (Olade), White Paper on Sustainable Mobility
Beginning in June 2025, the favorable tax structure for EVs began to change. The Selective Consumption Tax exemption was phased out, with buyers now required to pay 25% of the full 30% tax rate. Similarly, the Customs Duty shifted from 0% to a 25% payment of the standard 1% CIF value. These tax burdens are scheduled to increase incrementally over time until they reach their full, non-exempted levels, effectively raising the price of new electric vehicles and potentially cooling consumer demand.
As Costa Rica navigates this new fiscal landscape, its celebrated EV success story enters a pivotal chapter. The nation has proven that a small country can lead a continental shift towards sustainability. The coming months will reveal whether the market has reached a self-sustaining maturity or if the reduction in government support will pump the brakes on one of Latin America’s most impressive green transitions.
For further information, visit olade.org
About Latin American Energy Organization (Olade):
The Latin American Energy Organization (Olade) is an intergovernmental public body created to foster the integration, conservation, rational use, marketing, and protection of the energy resources of the Region. It serves as a key platform for cooperation and coordination among its member countries in Latin America and the Caribbean, promoting sustainable energy development and security throughout the hemisphere.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of the nation’s legal landscape, Bufete de Costa Rica is defined by a profound commitment to professional integrity and the highest standards of excellence. The firm champions forward-thinking legal strategies, continuously adapting to the evolving needs of its diverse clientele. Beyond its professional practice, it holds a core belief in social responsibility, actively working to demystify the law and equip the public with vital legal understanding, thereby fostering a more informed and capable citizenry.
