Electric Vehicles: Accelerating Sustainable Transportation

Monday, February 26, 2024
Years ago, in a meeting with government officials in a Latin America country, Guillermo Areas of BMW was talking about the benefits of electric vehicles when someone asked him whether he was referring to golf carts. It was hard to even imagine back then that electric vehicles would appear on the region’s highways.


Fast-forward a little more than a decade, and the progress is clear, according to Areas, the BMW Group’s Head of Government and External Affairs for Latin America and the Caribbean. Of the more than 48,000 vehicles the German automaker sells in the region, 25% are fully electric or plug-in hybrid.

And, Areas said in an interview, the market is not just for premium vehicles. Latin American consumers now have many options in different price ranges, including mass-market electric vehicles (EVs) made in China or South Korea.

He compared the development of this market to that of cellphones. In the beginning, he recalled, mobile phones were so expensive that few people could afford them, but eventually, they were produced on a large enough scale for prices to come down. Now they are considered a basic necessity.

Countries in the region are moving at different speeds to adopt electric mobility. Part of Areas’s job is to try to convince decision-makers to put laws, regulations, and incentives in place to accelerate the process—a task he compared to “evangelization.”

It’s important for governments to understand the future benefits, he said—including reduced oil imports and cleaner air—and to see how feasible electric mobility can be, particularly in small countries that need less charging infrastructure. In addition, he said, governments are seeing the potential of electric vehicles to help reduce air pollution in large metropolitan areas such as Mexico City, Bogotá, Colombia, and Santiago, Chile.

In Mexico, the BMW Group and the vehicle charging company Evergo have forged an alliance to strengthen the network of public charging stations available in the country. Credit: BMW Group Mexico

Areas will participate in a panel discussion on sustainable transportation at the upcoming Sixth Meeting of Energy Ministers of the Energy and Climate Partnership of the Americas (ECPA), which will take place March 14-15 in the Dominican Republic.

In the recent interview, he said countries that generate most of their electricity from renewable sources—such as hydroelectric, wind, and solar power—are especially driven to embrace electric mobility. Such is the case with Costa Rica and Uruguay, for example, where the electric grids are almost entirely green. From a strategic standpoint, Areas said, it makes sense for countries in that position “to take advantage of that bonanza, that blessing that they have.”

In addition to a clean electric grid, another important factor for success is continuity of public policy, he said. He noted that in Colombia, for instance, three successive administrations with different political leanings—the governments of Presidents Juan Manuel Santos, Iván Duque, and Gustavo Petro—have adopted and maintained policies to encourage electric mobility.

Policies that have proved successful in encouraging the EV market include reducing or eliminating customs tariffs on imported vehicles and applying lower sales tax rates to electric vehicles than to their gasoline-powered counterparts, according to Areas.

These types of fiscal incentives should not be permanent, though, or they will create market distortions in the long run, he said. However, he added, in the short term, they help level the playing field with internal combustion vehicles and help compensate for the subsidies many countries have provided for fossil fuels.

Other incentives countries can offer, according to Areas, include providing special highway lanes or preferred parking for electric vehicles, and exempting these vehicles from rules restricting circulation one day per week based on license plate numbers.


EVs in the Caribbean Region


An electric vehicle drives up Cherry Tree Hill in Barbados, one of the leaders in electric vehicles in the Caribbean. Credit: Sofia Hurst. Courtesy of Megapower.

In the English-speaking Caribbean region, most countries now have regulations in place to incentivize the purchase of electric vehicles, according to Xavier Gordon, co-founder and Executive Director of Flash Motors. The company, based in Kingston, Jamaica, offers electric mobility products and services to businesses and government agencies across the Caribbean.

Many of the island nations have lowered or even eliminated import duties on EVs, Gordon said in an interview—in some cases, by enough to achieve price parity with gasoline or diesel automobiles, which can carry duties of 30% to 60%. (The duty on an SUV with a V8 engine can be as high as 150%, he added.)

Electric vehicles are particularly suited to the Caribbean for a number of reasons, Gordon said. One is size: Small islands generally don’t require a lot of charging infrastructure because drivers don’t have far to travel. In Barbados and the Bahamas—among the EV leaders in the region—a driver may sometimes go for a week without needing a charge, Gordon said.

Range is more of an issue in the larger countries, such as Jamaica or Trinidad and Tobago, he added. And culture is another factor: “Jamaicans love their big vehicles.”

The relatively warm weather in the Caribbean also lends itself to electric vehicles, he said, since drivers don’t have to worry about the problems that can plague EV batteries and chargers in cold weather.

That doesn’t mean that electric vehicles will dominate the roads any time soon. For one thing, according to Gordon, the Caribbean tends to be a market more for used vehicles than for new ones, and globally, there are not yet a lot of used EVs available—especially ones for right-side driving.

In general, the stock of vehicles in a country turns over very gradually, since only a small percentage of drivers will buy a car in any given year. And not everybody understands the value of an electric vehicle, Gordon said. “It’s going to be a slow process. It takes time.”

As he sees it, electric mobility benefits all stakeholders in the Caribbean. For governments, it provides a way to enhance climate resilience, strengthen energy security, and save foreign currency reserves by importing less gasoline. Electric utilities, for their part, can increase their sales. “They’re the ones who have the most to gain,” Gordon said.

Electric vehicles are also a good deal for consumers, he said. Even in Caribbean countries where electricity prices are high, it still costs about half to operate an electric vehicle than a gas one, according to Gordon. By installing rooftop solar panels where they charge their vehicles—whether at home or on a carport at a business—consumers can become even more energy-independent and less vulnerable to outside forces.

“There’s no OPEC for the sun,” Gordon said.


EV Ecosystem


BMW will expand its plant in San Luis Potosí, Mexico, to manufacture electric vehicles and batteries there. Credit: BMW

The development of electric mobility in the region will take the combined efforts of a whole ecosystem that includes governments, the private sector, multilateral banks, and civil society, according to BMW’s Guillermo Areas. It’s not just about persuading people to buy electric vehicles, but about providing the infrastructure needed to make that happen—not just charging stations, but better roads.

Technology transfer is also important, according to Areas, who noted that the BMW Group is expanding its plant in San Luis Potosí, Mexico, to manufacture electric vehicles and batteries there. The company plans to invest $800 million in the expansion and begin producing its new line of Neue Klasse EVs there by 2027, he said.

The EV market also opens up opportunities in related industries. For example, Areas said, Chile and Argentina stand to reap economic benefit from their supply of lithium, used in the production of batteries. BMW already sources some of its lithium from those countries, he said, and it requires suppliers to meet stringent environmental standards—another key consideration.

Areas called for governments and the private sector in the region to work together on public education campaigns to convey the importance of a transition to renewable energy and clean transportation and “to send a message to citizens that this is not something fleeting but is the future of the country.” Public transportation must be part of that transition too, said Areas, who noted that some countries in the region are investing in electric buses.

Even at BMW, the company encourages its employees to take public transportation to reduce their carbon footprint, Areas said, adding that he typically takes the Metro to his workplace in Washington, D.C., and will often hop on a bicycle to move around the city. When it comes to mobility, he said, “the future is multimodal. It’s not only about the automobile.”

Cover Image: A charging station for the TransMilenio public bus system in the Colombian capital of Bogotá. Colombia is one of several countries in the region that have been investing in electric buses. Credit: Enel X