EREV range-extender electric cars: IUC and ISV in Portugal

Range-extender electric vehicles are becoming increasingly prominent, largely driven by Chinese manufacturers. After gaining traction in their home market, several of these models are now starting to arrive in Europe, positioned as an alternative to conventional battery-electric cars and to plug-in hybrids.

Known as EREV (Extended Range Electric Vehicle), these cars can be charged from a domestic socket or a charge point and are always propelled by one or more electric motors. The internal-combustion engine is not connected to the wheels: it exists solely to generate electricity when the battery charge starts to run low, enabling longer journeys without stopping to recharge.

What is an EREV (Extended Range Electric Vehicle)?

At first glance, an EREV can look like a fully electric car. That is exactly where the question arises: if the electric motor is the only thing driving the car, are EREV also exempt from IUC and ISV in Portugal?

IUC and ISV in Portugal: are EREV exempt?

The answer is not determined solely by how power reaches the wheels. Even though EREV are always driven by one or more electric motors, the Portuguese state treats the mere presence of an internal-combustion engine as changing the vehicle’s tax status, even when that engine works only as a generator.

As a result, while 100% electric cars are exempt from paying IUC in Portugal, EREV do not benefit from the same regime. From a tax perspective, they are generally treated in a similar way to plug-in hybrids.

How is IUC calculated for EREV?

For EREV registered as category B passenger cars, IUC is calculated using the same rules applied to other internal-combustion vehicles first registered since July 2007.

The calculation is based on two components: the displacement of the combustion engine and the type-approved carbon dioxide (CO2) emissions. The higher these figures are, the higher the IUC will be. The amount obtained is then multiplied by a coefficient set according to the year of the vehicle’s first registration.

In practice, many EREV pay less IUC than a combustion-only car of comparable size and power, thanks to lower type-approved emissions and, in some cases, a smaller combustion-engine displacement.

However, there is no single IUC amount that applies to all EREV. The tax always depends on each vehicle’s type-approved characteristics and its first registration date.

What about other tax benefits?

Although they do not qualify for an IUC exemption, EREV may be able to access the tax framework applied to plug-in hybrids. Again, this depends on the type-approved specifications of each model.

For ISV, plug-in hybrids can qualify for an intermediate rate corresponding to 25% of the tax when they have a minimum electric range of 50 km and official emissions below 50 g/km of CO2.

From 2026, models type-approved under the Euro 6e-bis standard can keep this ISV reduction with emissions up to 80 g/km of CO2, provided they still guarantee at least 50 km of electric range.

For companies, reduced autonomous taxation rates still require a minimum electric range of 50 km and official emissions below 50 g/km of CO2.

Therefore, an EREV (an electric car with a range extender) is not exempt from IUC. Nor does it have guaranteed access to the other tax benefits. The vehicle’s classification, electric range, type-approved emissions, and approval standard determine which regime applies.