Charging Ahead: The Growth of Electric Car Markets in Latin American Cities

Tue, 03/05/2019 - 12:12
Chile, Colombia, Mexico, Latin America and Caribbean

In Latin America 37% of total emissions come from the transportation sector, out of which, 27% comes from private vehicle ownership. Annually, it is estimated that 50,000 premature deaths result from transport related emissions. Meanwhile, Latin America enjoys one of the cleanest electricity grids in the world with an estimated 60% of their electricity coming from large-scale hydro-electricity. This means that electric vehicles could have an out-sized impact on air quality and greenhouse gas emissions. Significant progress has been made in shifting to cleaner transport modes, propelling three Latin American cities as leaders in electric vehicle adoption: Bogotá, Mexico City, and Santiago.

In Bogotá air pollution is a major driver in their rapidly urbanizing population. To encourage EV ownership the city of Bogotá has employed public-private partnerships to build EV charging infrastructure, exempting EVs from vehicle limits within the city, and providing prioritized parking to EVs.

Mexico City is the most congested city in the world. Between 2000-2010 the number of personally owned vehicles doubled, contributing to city congestion and poor air quality. Mexico City has worked to provide incentives for alternative fueled vehicles for better air quality. Mexico City has encouraged private EV infrastructure ownership while also creating “green corridors” with dedicated space for EVs. Mexico is also gaining momentum as a global manufacturing hub for cars and is working to establish the city as a center for EV manufacturers.

During winter in Santiago air quality will regularly be three times as dirty as WHO recommended levels. Chile also imports 95% of its fossil fuels. EVs can both clean the air and benefit the Chilean economy. Santiago has been incentivizing clean vehicles for nearly a decade with its emissions standards and green vehicle tax. In Santiago, polluting vehicles are taxed proportional to their emissions. This tax is then used to fund EV infrastructure and incentive. Thus as polluting vehicles become more expensive, EVs become cheaper.

These three cities offer a broad range of lessons learned that are valuable to other jurisdictions such as:

  • Building public-private partnerships is essential for establishing EV infrastructure. In Mexico City, the government worked with EV manufacturers while Bogotá and Santiago worked with private businesses, such as gas stations and shopping malls, to build EV infrastructure at convenient locations.
  • Providing adequate customer choice by excluding EVs from import taxes. Both Colombia and Mexico exempt EVs from import taxes while Chile has not always done this. In Chile there are significantly fewer EV models available to Chilean consumers even though EVs have been incentivized financially for longer in Chile.
  • Incentivizing global manufacturing in the region can increase local EV uptake. Mexico is known as a global auto manufacturing hub and Chile has large reserves of lithium and copper, and early data suggests high cobalt reserves, which are necessary for EV battery electrode manufacturing. Both countries have provided increased access and use of public goods to establish their countries as leaders in EV manufacturing.
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The Dialogue