The road ahead for electromobility in Latin America

Electromobility is one of the major challenges in the energy transition in Latin America and the Caribbean since the transport sector is one of the major contributors to greenhouse gas emissions.

However, the adoption of technologies has been uneven, with countries such as Chile, Colombia and Mexico in the lead, while others such as Paraguay are just taking the first steps. The emergence of green hydrogen in the heavy transport segment adds new challenges.

BNamericas caught up with Andrés García, regional mobility manager at non-profit public-private cooperation agency Invest in Latam, which is holding the Latam Mobility & Net Zero Cono Sur summit in Santiago this week.

BNamericas: What trends can be seen in the electromobility sector in Latin America?

García: Before there was a lot of talk about the offer, that there was a supply of special vehicles, cargo vehicles, private vehicles, etc. The trend that is coming is fleet replacement in companies that have adopted electromobility and decided on it definitively three years ago.

Next year, we'll see more aggressive fleet replacement and the other thing that is coming is more intense development of freight logistics now that electric trucks are making their way into Latin America, which at one time was seen as somewhat utopian.

BNamericas: What have been the main drivers of electromobility in recent years?

García: It's interesting that we now have a clearer offer in terms of charging, whether fast or slow charging, direct or alternating charging, etc. This diversification of charging makes electromobility much more credible and affordable.

Adoption is highest at the corporate, country and city level because there's not much of a barrier to acquiring a new technology. Just because you don't know how an electric vehicle works doesn't mean you can't buy it. The availability of charging infrastructure is a bigger issue.

BNamericas: What bottlenecks remain to be resolved?

García: The first would be training. People have not yet fully adopted electromobility because they still don't fully understand it. It's easier to understand a volumetric phenomenon like gasoline than a physical one like electricity.

Another barrier to entry is the nature of the energy being used. It makes no sense to decarbonize transport and further carbonize the generation matrix. It makes no sense to have electromobility if the electricity still comes from a thermal power plant. A renewable and clean generation structure still needs to be developed.

The last thing would be financing issues. Right here at Latam Mobility we were talking about positive incentives or disincentives for old technologies; how to make the acquisition of electric or low-emission vehicles more attractive from a public policy perspective.

The legislative side also plays a role in lowering the entry price. In some countries, electric vehicles are subject to a luxury tax. The question remains as to how far this should be applied in the case of companies or individuals who are beginning to take part in the decarbonization of transport.

BNamericas: Which countries do you expect to lead the transition to electromobility in the coming years?

García: Mexico is beginning to take the lead in both sales and adoption of technologies. Chile has grown in a very organized way and has taken the mobility value chain very seriously, starting with public transport and then moving towards private vehicles.

In Mexico, the dynamic is a little more mixed and has been to go to everything at once, but they managed to surpass Brazil in sales of electric vehicles in the last quarter, which is no small feat when comparing both markets.

BNamericas: Which countries have been left behind and why?

García: In terms of public policy, countries with less developed economies have been left behind. It may also be the case that the actors in the private ecosystem who are normally the ones promoting new technologies are not as strong.

This last phenomenon can be seen in Chile. Here one does not speak with car manufacturers making electric cars here, one speaks with importers, unlike Brazil or Mexico that have manufacturing.

Not having such strong players that manufacture and sell these new technologies in the same country causes them to be delayed to a certain extent.

BNamericas: What role do you expect Invest in Latam to play in promoting electromobility beyond events such as Latam Mobility?

García: Our mission is to accelerate the sustainable transition. We do this through corporate meetings and training, connecting leaders in charge of decision-making.

For example, we're connecting the Chilean electromobility ecosystem with international ecosystems to exchange lessons learned.

We have discussions between transport authorities in Chile and Paraguay. Companies in Chile that face barriers to entry are now talking to firms in China, the United States, Europe and the rest of Latin America that can help them bring new solutions.

We're also supporting cities and companies in decision-making through training and consulting.

BNamericas: Chile plans to launch a tender for an electric corridor in the city of Concepción under the concession model. Do you consider this type of mechanism a valid tool to accelerate the transition?

García: Yes. In the end, new business models have to be developed for new technologies.

A big challenge for electromobility is to be independent of capital cities. Chile boasts that Santiago has the largest fleet of electric buses of any city outside of China, but the regions have almost none.

To democratize electromobility, one has to look at different business models that give the private sector an opportunity to invest in intermediate cities.

BNamericas: When do you expect green hydrogen to take off?

García: Green hydrogen requires dense infrastructures; condensing it isn't cheap, nor is maintaining it. It has certain cost and adoption barriers.

The idea of hydrogen is that it should be green, so it also depends on serious renewable energy infrastructures. As I said, it makes no sense to decarbonize the transport or industrial matrix if we're going to carbonize the energy matrix further.

Many conversations and several more steps are needed before we can see a serious green hydrogen offering. However, Chile is leading the way in Latin America and is positioned to be one of the most competitive players in the region by 2030 or 2035.

BNamericas: In the port sector, there is uncertainty among operators about whether to adopt green hydrogen or other tools for decarbonization without knowing which option would be preferred by shipping companies.

García: Exactly. In the case of Chile, a policy for shipping companies is being prepared. I haven't yet read it in its entirety, but there will be a couple of roadmaps for ports and shipping companies.

But in that sector, the transition is a bit slower because there's not as much innovation. It's not as if you can make three or four ships quickly to test each technology.