Latin America: electric car implementation on the horizon?

The main challenge resides on its costs

Latin America: electric car implementation on the horizon?

Leer en Español: Implementación de vehículos eléctricos en América Latina

The Interamerican Development Bank is one of the main institutions that guides and funds Latin American progress. In 2010, the company stated that nearly 20,000 electric cars were sold worldwide. In the end of 2014, said figures exceeded 700,000 and by June 2017, gross sales surpassed the 2 million mark. Nearly half of the demand comes from the United States, a quarter from Japan, and the remaining amount belongs to China and the rest of the world.

The South American countries that lead the implementation of electric vehicles are Argentina, Brazil, Chile, Colombia, Mexico, and Peru, which are expected to be selling between 52,000 – 220,000 units per year by 2023.

Roadblock

The main challenge regarding the implementation of a broad electric vehicle market in South America resides on its costs. Producing one unit of a crude-running-vehicle is cheaper than producing an electric car as components are scarce, making the finished product more expensive. The production cost gap is of 20% for hybrid vehicles and 65% for battery units.

Although innovation will seek for more competitive costs, the high lithium demand will increase its price. 50% of the world’s lithium reserves exist in the so-called lithium triangle between Argentina, Bolivia, and Chile, which grants the southern cone nations strong leverage.

Read also: Chile, Bolivia, and Argentina: This is the lithium triangle

Regarding taxes, protectionist countries like Brazil and Argentina will charge to import electric vehicles with high fees, while Mexico and Colombia favor offer lower border royalties. Chile and Peru remain neutral. The cost of ownership for a vehicle in whatever country will also vary depending on its landing fees.

On the other hand, electric cars possess an advantage over gasoline fueled vehicles as both maintenance and fuel is cheaper. Although acquisition prices are seemingly higher for electric cars, in the long run, it remains the better deal. The benefits of charging with electricity represent a 98% discount in Argentina, 90% in Paraguay, and 70% in Brazil, Colombia, and Ecuador. Only in Venezuela is electricity costlier than oil.

Psychological elements such as distrust for new technologies must be addressed by governments, who must as well provide enough electrical infrastructure and sufficient pathways for the new machines to reach their optimal performance.



Latin American Post | David Eduardo Rodríguez Acevedo

Copy edited by Susana Cicchetto

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