Andreas Jaramillo, VG Mobility: Going electric means implementing an ecosystem
The electrification of transportation is sporadically occurring in Latin America today as there are still many questions in terms of viability and ways to overcome challenges. To help us answer the who, what, where, when, and why in terms of making the transition to electric vehicles (EV) today is Andres Jaramillo.
Besides holding a masters in innovation and entrepreneurship, Mr. Jaramillo is CEO of VG Mobility (VGM), a Bogota based company backed by global energy trader Vitol which is focused on the electrification of transportation in the Americas and helping businesses reach their low-carbon goals and making the electromobility transition.
For more on what is happening in the Latin American fleet and mobility scene, make sure to attend the next Fleet LatAm Business Networking group meeting taking place online, 5 July at 9am (Mexico City time). The topic of the day will be TCO and Energy.
Is going electric viable in Latin America right now?
Jaramillo: First of all, remember that going electric is not only buying or having a car, truck or bus. It involves a whole ecosystem, meaning that electricity will be needed by way of charging infrastructure.
As we want to create an ecosystem for our customers, VGM leases vehicles, but we also provide the necessary charging infrastructure for their operations. It can be viable, but it depends on various factors.
What types of vehicles do you feel could make the transition to electric right now?
Jaramillo: I think that a bus is the perfect vehicle to electrify today. They have a life of 12-15 years, run many kilometers per day, have a place to sleep every night which is usually in the same location. For example, a public bus works along the same route and only in one city.
Second, I would say that a taxi or a mobile app platform car like Uber or Cabify could be good for electrification as they also run a lot of miles. Choose the appropriately priced vehicle to maximize total cost of ownership (TCO).
And what we have left to consider are trucks for last mile operations within cities which have a home base for recharging.
And what are the challenges to making the transition?
Jaramillo: The main challenge in Latin America, and in much of the world, is knowing whether or not we have enough electricity supply to go around, and this also includes adequate EV recharging networks.
I am not only talking about private charging such as in homes and offices, but also for public charging. Factories will need to have enough electricity for its truck fleet, but they also need enough energy onsite for equipment and machinery.
Private sector investment can help but for this to work, we need public policies. Governments need to improve electricity grids, taking them to places which don’t currently have supply by doing things such as building substations.
Do you know of any legislation in specific countries?
Jaramillo: In Chile, the government in Santiago has specific requirements. For example, if you want a fleet of electric buses, the local energy company or utility will need to assure that energy is going to where the buses are operated.
This is an important step in advancing the transition to electrification, but such laws are not in every country. We are pushing for this in Colombia, but it is not easy. Without policy change, the electricity assurance responsibility falls on us.
Having energy lines is not everything, however. In the United States, there are many energy lines but many of them are outdated. They need an infrastructure overhaul there.
How much does a car need to run to make electrification worthwhile?
Jaramillo: On average, an EV is cheaper to operate (energy cost per kilometer) after 3,000km-4,000km.
But we still have the issue of purchase cost, right?
Jaramillo: Yes, it is cheaper to operate after 3,000km or so but the price of an EV is still more expensive, and this certainly needs to be considered. As such, another concern to keep in mind is residual value. They need to have a reasonable amount of value after five years or more.
I saw that you were collaborating with Chinese manufacturer BYD. Are you looking to collaborate with other companies and in which countries are you focusing on?
Jaramillo: We are carrying out some bus projects with BYD in Colombia but yes, we are open to working with all brands. In Brazil, we see that Mercedes is creating its first electric bus so we will keep an eye on things there.
We are working in most Latin America countries, except for Mexico right now.