Challenges of electrifying transportation in Brazil

RIO DE JANEIRO, BRAZIL – The electrification of transportation can be done through 4 main types of vehicles:

• 100% electric vehicles: they are exclusively powered by rechargeable electric batteries.
• Hybrid vehicles: composed of a main combustion engine and a complementary electric motor, generating fewer pollutant emissions than traditional vehicles.
• Plug-in hybrid vehicles: these have a smaller internal combustion engine and more powerful electric batteries.
• Hydrogen fuel cell electric vehicles: they feature an electric motor that works through a fuel cell and converts the chemical energy of hydrogen into electric energy.

Electrification of transportation mainly involves the energy structure to keep it running. In contrast to other countries, this is not a problem in Brazil, where the main source of electrical energy (hydroelectric power) is renewable.

However, other challenges hinder the popularization of electric vehicles in the country.

BRAZILIANS’ LIMITED PURCHASING POWER

The manufacturing of electric cars is complex; it involves the automotive and electric sectors. Additionally, the high cost of lithium-ion batteries, the main components of these vehicles and which, despite having become more affordable in recent years, still make electric cars more expensive compared to conventional vehicles.

The Brazilian fleet consists of medium and low-cost cars, segments in which electric vehicles are little represented. Although the fuel savings justify the long-term investment, in general, the majority of Brazilians cannot afford a vehicle that costs around R$200,000 (US$36,000), depending on the model.

Hopefully, automakers will be able to lower the manufacturing cost and pass on the savings to consumers, thereby making electric cars more accessible to the Brazilian public.

LOW RESALE VALUE

Furthermore, in terms of cost-benefit to consumers, those who choose to buy an electric car and intend to sell it years later, may have the initial value depreciated more than the resale value of an average or low-cost car. This is also a deterrent to the purchase of these cars, which hinders the electrification of transportation in the country.

LACK OF INVESTMENT IN CHARGING INFRASTRUCTURE

The infrastructure to support electric cars is still in its infancy in Brazil, notably with respect to charging. Owners can recharge their cars at home, but when driving, depending on the location, finding a recharging station may be difficult.

Some Brazilian cities have a good supply of electro-stations, such as São Paulo and Rio de Janeiro. But the majority are in private places, as they are initiatives of car manufacturers. Volvo, Enel and Nissan are among these companies.

In addition to the time it takes to find a charging station, electric car owners also struggle to find a charger compatible with their model. Another challenge that discourages the electrification of transportation in the country.

VALUING THE BIOFUEL SECTOR HINDERS INCENTIVES FOR ELECTRIFYING TRANSPORTATION

Another factor influencing the electrification of transportation is Brazil’s strong biofuels sector. The use of ethanol and biodiesel also reduces, albeit to a lesser extent, greenhouse gas emissions in transportation. In this context of a high share of biofuels, the rapid deployment of electric vehicles may not be interesting.

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