Latin America is speeding up its EV market
To deal with air pollution and international emission standards, several Latin American countries are creating incentives to stimulate the electric vehicles (EVs) market. Regardless the national differences, certain tendencies can be noticed.
Considering the high purchase price of EVs, financial incentives are crucial. Exemptions from import taxes are implemented in Ecuador, Uruguay, Costa Rica and Colombia, while Brazil and Argentina lowered the import taxes. Exemptions or rebates on value-added taxes (VAT) apply at least in Colombia, Uruguay, and Ecuador. Additionally, revenue neutral financial incentives such as rebates on circulation taxes, tolls, parking fees, and insurances are common in the region, while reduced electricity tariffs for charging of EVs apply in various countries including Mexico and Santiago (Chili).
Various non-financial incentives are put in place as well. The most feasible is mandating a minimum percentage of parking spaces for EVs in public parking lots, as implemented in Mexico, and recently in Guayaquil (Ecuador). Exempting EVs from traffic restricted zones, as in Colombia and Mexico, and permitting EVs the use of exclusive bus lanes, are feasible incentives as well, even more considering the high number of Bus Rapid Transit (BRT) systems in the region.
Further on, several Latin American countries created programs to encourage the construction of charging infrastructure, such as Costa Rica, Mexico, Colombia, and Uruguay. Obliging new construction sites, public buildings and workplaces to implement charging points is another strategy.
National utility companies are mostly in charge of the installation of charging points, in Brazil the senate even approved a bill which obliges electric utilities to install recharging points throughout cities. To allow private investors to set up charging points as well, some countries created exemptions, such as Brazil, where lately car manufacturer Nissan is studying ways to implement recharging infrastructure preparing the launch of its full-electric Leaf in Brazil in 2019. Overall public-private partnerships are increasing, including in Chile (between Petrobras and Nissan), Argentina (between Edesur and Renault), and Mexico.
Often the above mentioned incentives are combined with discouraging strategies for ICEVs, in the form of environmental regulations. In Chili both EVs and HEVs are exempted from environmental taxes, whereas in Ecuador only EVs are exempted, and HEVs receive tax rebates. Further on, regulations to limit tailpipe emission or certain pollutants, might encourage the use of EVs as well. It is remarkable that this kind of legislation varies enormously in the region, with severe emissions standards in Chile versus the absence of norms as in Bolivia and Paraguay.
Considering the high costs of the EV market, a combination of government support and the involvement of private investors will be crucial to expand EV facilities and sales in the region. This evolution might be speed up by the reduction of manufacturing costs, the increasing concerns about climate change, and rising fuel prices, however adequate policies remain decisive.
Authored by: Fien Van den Steen