Brazil: Electrification of bus fleets comes up against billionaire cost

RIO DE JANEIRO, BRAZIL – The replacement of urban diesel buses with 100% electric models is an idea that has been gaining momentum in several cities in Brazil, but its effectiveness runs into a billionaire cost.

A survey conducted by Poder360, based on data from the industry and the transportation sector, shows that electrification in 18 capital cities would cost almost R$37 billion (US$7.8 billion) in one year.

On the other hand, according to estimates by the National Association of Urban Transport Companies (NTU), the cost per kilometer, when comparing diesel and electric energy, would drop 73%: from R$3.10 to R$0.84. Fuel accounts for about 1/3 of the total operational costs of bus companies.

The diesel price escalation, which in March alone had an increase of 24.9% in Petrobras’ refineries, has intensified the debate around changing the fleets that serve the cities.

The Ministry of Regional and Urban Development’s National Secretariat for Mobility and Regional Development has begun a technical evaluation of a proposal made in April by Idec (Brazilian Institute for Consumer Defense) and other NGOs to create a national program for renting electric buses.

According to the ministry, the electrification of the fleets enables energy security since the electrical sector presents greater stability than the petroleum sector.

The technical analysis of the rental program will cover the convergence with the National Policy of Urban Mobility and the regulatory guidelines from the legal framework of public transport, whose debate is still in progress.

According to Rafael Calabria, coordinator of Idec’s Urban Mobility Program, the total savings for the local management of transportation systems would be between 28% and 36%, considering that the rent would be funded with Union resources and already include maintenance costs.

The specialist says that the plan needs to be embraced by the Ministry of Regional Development (MDR) and the National Congress, which are responsible for putting the resources forecast in the budget laws.

“It is a structural change. It is the federal role in transportation. It’s not just about construction. There has to be a federal line for bus management. It is a measure that changes everything, with a powerful impact on the quality of services. Today, the businessman dominates everything, asking for resources with no counterparts. If the company stops, the mayor’s hands are tied, and the city is left without buses,” said Rafael.

São José dos Campos, in the interior of São Paulo state, is putting into practice a model that is in line with the Brazilian Consumer Defense Institute’s (Idec) proposal. Since October, the city has had 12 100% electric articulated buses made by BYD.

Now, the city government has taken another step towards electrification. According to Marcello Von Schneider, BYD Brazil’s institutional director and head of the bus unit, since the concession contract for São José’s regular urban lines expired and the operation is under an emergency contract, the city hall opened a new bidding process in which it opted for leasing the vehicles.

Von Schneider says that the city wants the 350 concession buses to be electric. A city transportation company called Urban will lease the vehicles, and then there will be a bidding process just for the operation.

“So, the operator that comes to operate in the future will not have to make the disbursement to buy the rolling stock. He will enter, provide the service, and be paid for the service,” said Von Schneider, adding that BYD should participate as a supplier to the leasing company.

For the executive, electrification is viable for small and medium cities and capital cities. He affirms that the transportation system model today in Brazil is bankrupt and needs to be renewed.

“How do we renew it? The public sector needs to create new bidding models. And one of the new models that need to be created is this rental model. In other words, you take the investment away from the bus operator, who will seek the concession. Because, today, their big problem is to have credit to buy the vehicles”, said Von Schneider.

Agents in the sector point out the rental of the buses as a better alternative to the purchase because it has a lower immediate cost. Still, it is much higher than that of a traditional diesel vehicle.

Another problem in the path of electrification of the fleets in the country is the country’s production capacity. The National Association of Motor Vehicle Manufacturers (Anfavea) does not have the installed capacity by vehicle but states that the peak production of common buses in Brazil was in 2011, when almost 50,000 units were produced. Poder360 found that two of the three electric bus manufacturers in Brazil do not produce even 8% of this.

But, even though the movement of electrification of the fleets is incipient, the industry is trying to keep up. The Brazilian company Eletra transferred its entire industrial operation to an area almost ten times larger, in São Bernardo do Campo (São Paulo), where it will be able to produce 150 buses per month. According to Iêda de Oliveira, Eletra’s director, the new plant will be operational by August.

According to Oliveira, who is also coordinator of the Heavy Vehicle Group of ABVE (Brazilian Association of Electric Vehicles), an electric bus costs, on average, 2.5 times its diesel counterpart. In the case of articulated buses, twice. She says the batteries are guaranteed to have 80% energy capacity until the 8th year of operation.

“But recharges of 10 to 20 minutes in the intervals of bus operation can lengthen the life of the batteries, which can reach ten years,” said Iêda.

“WE CAN’T PLAY AT ELECTRIFICATION,” SAYS NTU PRESIDENT

Francisco Cristovam, NTU’s executive president, says that in the last 12 months, the diesel readjustments represented an average 27% increase in the costs of municipal transportation services. As the account does not close, the impact on fares is direct and inevitable.

“These increases are making the fare needed to cover costs unsustainable. The municipalities define the quantity and quality of service. There is no magic. The companies have to present the costs to the city halls,” said Francisco.

For Francisco, there is, in fact, a movement in the country for the electrification of urban transportation systems, but caution is needed when the government makes decisions.

“We have nothing against electrification. We know that it is a worldwide trend. However, we can’t play around with electrifying transportation systems. The costs are very high. I mean: are the city governments prepared to pay this bill? Or: will companies invest? And what if the mayor changes?” said Francisco.

For the president of the NTU, the best solution for the unsustainability in which urban transportation finds itself is creating a national policy that has a program and defined roles for each agent involved, from the granting authority to the operators.

“I like the idea of the Union participating. When money comes from outside, it is always welcome. Now, the important thing is: in any case, it has a cost,” said Francisco.

With information from Poder360