RIO DE JANEIRO, BRAZIL – In large cities, carbon emissions and traffic jams caused by the growth of the vehicle fleet contribute to a deterioration in the quality of life and, should the trend persist as the population grows, experts agree that steps must be taken towards a different path to the current one.
This is the commitment of the automotive industry, where electric vehicles promise to change the market, thereby contributing to decarbonize the planet.
According to a McKinsey study published in early September, sales and penetration of electric vehicles accelerated during the second half of 2020 in the main markets concentrated in Europe, China and the United States, where these types of cars are being purchased.
Europe tops the list, reaching 8%, due to stricter emissions policies for original equipment manufacturers and subsidies for consumers. In fact, last July, the European Union laid the foundations for its green transformation by contemplating the end of combustion-engine cars sales by 2035 and reducing net greenhouse gas emissions by at least 55% by 2030.
The report highlights that the transformation of the way we travel must go hand in hand with changes in three main areas: regulation, consumer behavior and technology. With respect to the first point, the study notes that Joe Biden’s administration in the United States introduced a 50% target for electric vehicles by 2030.
In addition to these targets, most governments are also offering subsidies for electric vehicles. Support for bicycle use is also increasing, in line with efforts to help decontaminate and reduce harmful gases for the planet. Many urban areas in Europe are implementing car access regulations. In fact, over 150 cities in Europe have implemented low emission and low pollution emergency access regulations.
The latest McKinsey consumer survey suggests that average bicycle use (shared and private) may increase by more than 10% in the post-pandemic world compared to previous years. In addition, consumers are increasingly open to shared mobility options. For instance, over 20% of German respondents say they already use ride-sharing services (6% do so at least once a week), which can help reduce vehicle miles traveled and emissions.
For the present and future of electric vehicles, innovation plays a key role. The industry has attracted more than US$400 billion in investments over the past decade,some US$100 billion of which since the early 2020s.
All of this money is earmarked for companies and startups working on the electrification of mobility, connected vehicles and autonomous driving technology. And the study suggests that electric vehicles should account for 75% of global passenger car sales by 2030, which is significantly ahead of the industry’s current course and speed.
RECORD SALES IN CHILE
Chile’s National Automotive Association (ANAC) Secretary General Diego Mendoza points out that this year the institution began to conduct a report on sales of zero- and low-emission vehicles in Chile, addressing various topics on electromobility.
In line with the global trend, ANAC found that all low-emission vehicle segments have grown since April to date, ranging from 100% electric options to other transition technologies attractive to consumers. The latter allow the coexistence of an internal combustion engine with external recharging to take an intermediate leap toward what is entirely clean energy.
Mendoza highlights that there was a record sale of hybrid vehicles in May 2021, and most notably in the months of June through August, surpassing even the 2018 and 2019 sales. In the year-to-date: 282 electric cars, 1,127 conventional hybrid cars and plug-in hybrids purchased in lower volume (137), which have also posted a record performance.
“We believe that there was a change in consumers who are increasingly valuing these low-emission vehicles,” Mendoza says, noting that many of these purchases are not only intended for private transportation, but also for businesses or the provision of services with greater energy efficiency.
Although purchase figures have risen, the electric fleet in the country currently stands at 0.6% of the total, according to estimates by Sebastián Tolvett, an academic at the Metropolitan Technological University and an expert in electromobility. Regarding regulation, he points out that the country has agreed with the international community to become carbon neutral by 2050.
To this end, 60% of the private vehicle fleet must become electric and 100% of the public transportation fleet must operate with clean energies. Given the limited time to achieve this goal, Tolvett states that policies must be created to encourage its use, rather than comparing with foreign powers.
Foreign cases are numerous. For instance, the Chinese government offers free registration plates. “Norway, a leading country in e-mobility, has a Gross Domestic Product (GDP) of US$75,000 per capita. In Chile it is US$14,000. We should think about what we are going to do, but looking at a European-type policy is the wrong approach,” Tolvett adds.
The Energy Efficiency Law was published last February in the country, which seeks to promote the renewal of the vehicle fleet, with emphasis on zero and low emission vehicles, which according to ANAC will contain a number of incentives but none to be implemented in the immediate future, with the exception of a tax deduction for the purchase of an electric vehicle when acquired by a company, and this vehicle becomes part of its fixed assets.
Other regulatory advances are the publication of the Superintendency of Electricity and Fuel (SEC) on electric vehicle charging infrastructure, with rules on the installation and operation of residential chargers.
Regulation must also be accompanied with the expansion of the supply chain. The Ministry of Energy has stated that there is at least one charger per region, with a higher prevalence in the urban centers of the Metropolitan Region. A situation still in its infancy, considering that -for example- the French government has committed itself to have an electric charger for every 65 km on the roads by 2035.
Another situation is the type of charger, considering that technologies depend on the country of origin, with as many as 28 different options for plugs. Charging networks to be created will have to consider the different connections.
VOLVO’S CASE
Automotive companies have begun to move away from fuel-powered vehicles. Volvo, the Swedish brand that since 2010 is a subsidiary of its Chinese peer Geely, has taken the transition seriously and its main goal is to produce only models with electrified variants.
In a couple of weeks the company will launch the XC40 model in Chile, the first electric vehicle from its plants to reach the country, which seeks to be a milestone in its progress and adds to its commitment to have half of its vehicle production fully electric by 2025 and the remainder with some degree of electrification.
Volvo Cars Chile’s Marketing Manager Catalina Echegaray points out that its commitment is to reach 100% of the fleet in electric mode by 2030, hoping to be climate neutral by 2040.
Locally, Volvo recently signed an agreement with Enel X for the installation of 100 charging points throughout Chile, to encourage and increase availability. “We know that as an industry it is one of the most polluting. We want to be part of this change and contribute by encouraging other automotive brands to get on board the e-mobility train,” Echegaray says, adding that the creation of various benefits or incentives are key for the end consumer to choose an environmentally friendly option.
In his case, for the purchase of a plug-in hybrid or an electric vehicle, Volvo offers its customers a free charger and home installation. By the end of the year, Volvo expects to offer a mobility pack, which will allow customers to charge on public roads for a year.
Sebastián Tolvett says that understanding and regulating an offer in line with our reality is lacking. The professor cites the case of China, where the “Hong Guang Mini,” an economical electric vehicle costing US$4,500, has become a popular and powerful option, posting sales of 112,000 units in the second half of 2020. An option that Chileans’ pockets could afford compared to others far too expensive and thus not likely to reach the local market.
Tolvett says that another pending issue is the autonomy of this type of car. Even if an electric vehicle has up to 400 kilometers autonomy, most trips are much shorter in the daily life of drivers.
The issue to be addressed should be how to make the purchase more accessible to Chilean standards, while advancing policies and measures that allow this type of mobility to be included as a real option, in line with the global goals of lowering pollution levels, the expert says.