With growing concern over climate change and rising energy costs, more businesses in the Philippines are racing to put electric vehicles (EVs) on the road.
Compared to traditional cars that use internal combustion engines, electric vehicles are being marketed as one of the most efficient tools towards carbon neutrality and, in the long run, as an escape from soaring oil prices.
These sustainability imperatives have prompted large local companies like Manila Electric Co. (Meralco) and the Ayala Group to actively participate in the change. Even the government is starting to offer incentives to electric vehicle manufacturers to speed up its adaptation in the country.
Meralco, as part of its Green Mobility program, is committed to electrifying its fleet of vehicles. DHL Express Philippines also announced the deployment of a new fleet of electric vehicles to handle shipments to key cities in Metro Manila. Meanwhile, the Ayala Group, through the industry arm Integrated Micro-Electronics Inc., has rolled out more charging stations to the general public using Ayala shopping malls as a springboard.
For ordinary Filipinos, however, the transition can be daunting. The reluctance stems mainly from the higher upfront costs when buying electric cars as well as the lack of available charging infrastructure.
Stephen Castillo, a financial analyst who works in Makati City, is considering buying an electric vehicle for himself, but he has reservations.
“At this point, I don’t think it’s a feasible investment,” he said in an interview with Inquirer. “I think it’s still too expensive and the options are limited. What if you need to buy spare parts? Where can you go for maintenance visits? I don’t think there are places for that yet. If there are, I’m sure there are only a few.
According to ZigWheels, an international brand from India-based automotive portal CarDekho, there are 11 brands of electric cars available in the Philippines compared to 58 for cars running on diesel or gasoline.
The cheapest unit available is Clima Mobility’s Genius EV, priced at half a million, while the most expensive is Porsche’s Taycan, the luxury brand’s version of an electric car currently being sold at 9 million pesos.
Clima Mobility is not only the cheapest but also the number one Filipino-made electric car brand in the Philippines. Its first model, the Genius EV, is primarily designed to replace the government fleet of patrol cars and service vehicles. On a single charge of the battery, it can travel up to 72 kilometers and fully recharge in four to five hours.
“High upfront costs are seen as the biggest barrier to acquiring electric vehicles. Upfront cost, however, does not tell the complete picture,” says Raymond Ravelo, Meralco’s Chief Sustainability Officer and President and CEO of eSakay.”While today’s electric vehicles are generally more expensive than internal combustion engine (ICE) vehicles on an initial cost basis, over the lifetime of electric vehicles, owners actually benefit from Significant OPEX savings per kilometer, electricity costs less than gasoline/diesel, and EVs are less expensive to maintain than an ICE vehicle.
He adds that some of the most common reasons that prevent car owners from switching to electric vehicles are actually myths, including the lack of readily available charging stations, difficulty in maintenance and poor performance compared to ICEs in terms of power.
According to Ravelo, more than 90% of electric vehicle charging takes place at home or in the office, because electric cars can be charged anywhere there is an outlet. EVs also have fewer moving parts that can fail and require maintenance compared to ICEs – 98% fewer moving parts on average, in fact. Finally, Ravelo says EVs have better torque which translates to nearly instantaneous power, even when climbing steep grades.
Play the long game
It may be years before consumers are convinced to switch to cleaner modes of transport, but investors remain confident that as technologies improve and more players enter the electric vehicle space, electric vehicles will eventually dominate the roads.
Tesla leads the pack, but several automakers also seem to believe electric vehicles are the future of transportation as they continue to invest billions of dollars in developing their own electric car lines.
On Wall Street, the market capitalization of Tesla – which shipped nearly a million electric vehicles in 2021 – topped $1 trillion last year (now at $934 billion), while General Motors, valued at just $73 billion, is now investing heavily in the electric vehicle space.
In 2020, even as global car sales fell 16% due to the COVID-19 crisis, the electric vehicle industry was able to sell a record 3 million cars, up 40% from to 2019. In 2021, sales skyrocketed by 108%, according to the International Energy Agency (IEA). Some analysts predict that 2022 could well be the year of the “breakthrough” for the electric vehicle industry.
For the Philippine Chamber of Automakers Inc., significant tax incentives are needed to reduce the cost of electric vehicles, including policies that will stimulate consumer demand.
The Electric Vehicle Industry Development Bill aims to create a roadmap to develop the local electric vehicle market, but has yet to be enacted. But as part of the third tranche of the government’s tax reform, benefits should already be given to industry players.
However, several factors still need to be clarified. Batteries are the most essential part of an electric car, and the raw materials for its manufacture come from mining, another activity environmentalists frown upon.
There is also the expected increase in demand for electricity that accompanies the transition, which could slow attempts by countries like the Philippines to turn their backs on coal, the cheapest and most dominant source of energy.
Some analysts have also pointed out that the rise of electric cars could trigger another oil crisis, depending on how much oil demand it displaces over the years.
For the IAE, the electric car market will remain dynamic. Consumers, in turn, will benefit from having more options that can get them from point A to point B.
“As manufacturers refine their electrification strategies to capture market share rather than viewing electric vehicles primarily as policy compliance vehicles, we will see more resources devoted to advertising, increasingly aggressive pricing and the development of ever more attractive electric models,” says the IEA.
“Government policies remain the main driver of global electric car markets, but their momentum in 2021 also reflects a very active year for the automotive industry,” he adds.
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