News: Hybrid car tax breaks are ending
Tax Benefits for Hybrid Cars in Azerbaijan to End: The Market Faces New Changes
Azerbaijan’s automotive market is preparing for major changes — by the end of 2025, customs and tax exemptions for hybrid cars are expected to expire. This decision could mark a turning point for the entire industry, affecting prices and reshaping consumer demand.
Since 2019, the Azerbaijani government has actively supported the development of eco-friendly transport, initially exempting electric vehicles from value-added tax (VAT) on imports, and later extending the benefit to their sales. In 2022, similar incentives were granted to hybrid cars: according to Article 164.1.41-1 of the Tax Code, hybrid vehicles less than three years old with an engine volume under 2500 cm³ were also exempted from VAT. These policies significantly boosted public interest in green mobility and made hybrid cars one of the fastest-growing market segments.
However, by the end of 2025, the situation may change. Tax benefits for hybrid cars are unlikely to be extended, meaning that from January 1, 2026, import duties will again apply — inevitably driving prices up. Meanwhile, tax exemptions for electric cars are expected to continue for at least another year.
Chairman of the Azerbaijan Automobile Dealers Association, Eyub Aliyev, emphasized that supporting eco-friendly transportation will remain a state priority:
“Azerbaijan aims for ‘green growth,’ and to achieve that, electric vehicles must remain a priority. Hybrid car prices may rise, but this will only accelerate the transition to fully electric mobility.”
According to Aliyev, the end of hybrid tax benefits could revive the used car market, which has slowed down in recent years. As new hybrid and electric cars became more affordable, demand for second-hand vehicles decreased. However, rising hybrid prices could stimulate interest in used cars and traditional fuel-powered models again.
It’s worth noting that Azerbaijan’s electric vehicle infrastructure is expanding rapidly. Charging stations are being installed not only in Baku but also along major highways, making EVs a practical choice even for long-distance travel.
Thus, 2026 could become a defining year for the country’s car market. Azerbaijan continues its confident transition toward green transport, and the gradual reduction of hybrid incentives will only strengthen the shift toward electric mobility.
For those who want to experience eco-friendly driving today, Karavan Rent A Car in Baku offers a wide range of hybrid and electric vehicles for rent — from efficient crossovers to the latest electric SUVs. You can easily rent a car in Baku online with transparent terms and professional maintenance.
As the market evolves, one thing is clear — electric mobility is not just a trend, it’s the future of driving.
