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 vehicle (EVs) market. Regardless of the national differences, certain tendencies can be noticed.

Financing

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 have lowered them. 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 road tax, tolls, parking fees, and insurance premiums are common in the region, while reduced electricity tariffs for charging EVs apply in various countries including Mexico and Chile.

Benefits

Various non-financial incentives are put in place as well. The most easily implemented is mandating a minimum percentage of parking spaces for EVs in public car parks, as implemented in Mexico and recently in Guayaquil (Ecuador). Exempting EVs from traffic restricted zones, like in Colombia and Mexico, and permitting EVs to use bus lanes, are feasible incentives as well, especially considering the high number of Bus Rapid Transit (BRT) systems in the region.

Charging

Furthermore, several Latin American countries have created programmes to encourage the construction of charging infrastructure, such as Costa Rica, Mexico, Colombia, and Uruguay. Obliging new construction sites, public buildings and workplaces to install 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 electricity companies to install charging points throughout cities. To allow private investors to set up charging points as well, some countries have created exemptions, such as Brazil, where car manufacturer Nissan has lately been studying ways to install charging infrastructure preparing the launch of its full-electric Leaf in 2019. Overall, public-private partnerships are increasing, including in Chile (between Petrobras and Nissan), Argentina (between Edesur and Renault), and Mexico.

Environment

Often the above-mentioned incentives are combined with strategies to discourage ICE vehicles in the form of environmental regulations. In Chile both EVs and HEVs are exempt from environmental taxes, whereas in Ecuador only EVs are exempted and HEVs receive tax rebates. Furthermore, regulations to limit tailpipe emission or certain pollutants can 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 and the absence of any norms in Bolivia and Paraguay.

Essential

Considering the high costs associated with EVs, 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 sped up by the reduction of manufacturing costs, the increasing concerns about climate change and rising fuel prices. Nevertheless, adequate policies remain essential.

Image: electric taxi at a charging station in Mexico City.

Author: Fien Van den Steen