Rio: Leading the Way for Brazil’s First Electric Vehicle Factory

RIO DE JANEIRO, BRAZIL – At the moment, people all across Brazil are protesting for better and affordable public transportation, decent education and less government corruption. According to the Federation of Industries of the State of São Paulo, R$50 billion or US$24 billion are diverted through corruption a year.

Brazilian citizens are demanding public services that a resource-rich country like Brazil should be able provide, especially with the extravagant developed country taxes imposed on its citizens. Protests of this magnitude have not been seen in Brazil for over twenty years. Historic indeed, if you ask any Brazilian or experienced expatriate.

In a time when people are questioning the status quo of Brazilian politics, we should take this opportunity to question the model of development implemented here. Fossil fuel based economics are still the guidelines in the country, and when it comes to transportation, public or private, Brazil has yet to establish a sustainable model.

Even though the country has been using biofuels since the 1970s, such engines still cause emissions. There are no electric vehicle (EV) factories in the country yet, and therefore no regulations or public policies to incentivize their use.

EVs are not cheap in Brazil, hovering around US$100,000 per unit after importation and taxes. All imported cars must be zero kilometers when entering the border and EV manufactures like Mitsubishi want to bring these tariffs and taxes down. In the Unites States, EV cars costs are far less, around US$30,000 per unit, after government incentives.

Japan, the United States and the European Union, respectively, lead the global EV fleet that today stands at approximately 200,000 units, while Brazil is still trying to approach the modest hundred-unit benchmark, having a total of 77 units in its arsenal according to the Brazilian Association for Electric Vehicles.

However, electric vehicles are starting to tease the market in Brazil. Renault/Nissan recently announced an investment of R$2.6 billion in the creation of an EV factory in Resende, Rio de Janeiro, with the hopes of having it operational by the second quarter of 2014. Rio de Janeiro’s City Hall and the Nissan group have already introduced a pilot study to tests Nissan Leaf EV taxis with the hopes of having fifteen units circulating the city by the end of this year. There are two “fill-up” stations in the city, one located at Rodrigo de Freitas Lagoon in Zona Sul (South Zone) and another in Barra de Tijuca.

According to experts from the University of São Paulo, thirty percent of the total electricity generated by the Itaipu Hydroelectric dam would be sufficient to power an entire electric car fleet in Brazil. At today’s electricity rates, an EV owner would pay R$0.03 for every kilometer driven, making it seven times cheaper at the “pump” than gasoline powered cars of the same performance.

According to Carlos Murilo Moreno, the marketing director for Nissan Brazil, changing laws will be essential for the EV market, and infrastructure will naturally follow.

Filling stations, buildings and parking lots could host solar panels or even wind power, adding to the alternative energy mix that could potentially fuel EV cars, or further down the line even sell this electricity back to the grid through a government-sponsored net metering program.

The government has reduced the Industrialized Product Tax on individual car purchasing since 2008, adding to R$30 million in tax deductions. This is a perverse subsidy, since it promotes dirty powered, individual transportation at the expense of public funds. Perhaps it is time to use these incentives to promote EVs and mass public transportation as a way to reduce the soaring traffic jams and polluting emissions.

However, when considering the estimated R$50 billion/year pocketed money, those R$30 million are just a drop in the bucket. Today, more than ever, people need to change the way the political paradigm works when we think about transportation.

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Alfonso Stefanini has an MA in International Environmental Policy from the Monterey Institute of International Studies in California and a BA from Hampshire College. Alfonso lives in Rio de Janeiro, and he can be reached at: [email protected].