Giving e-vehicles a fresh push

Keen eyes are on a number of new incentives being dangled with the passage of the Electric Vehicle Industry Development Act (EVIDA) last April, which will be further defined in the implementing rules and regulations (IRR) that the Department of Energy (DOE), with relevant government agencies, are working on. The DOE plans to issue the law’s IRR early next month.

Meanwhile, the Department of Trade and Industry (DTI) is readying an Electric Vehicle Incentive Strategy (EVIS), much like the Comprehensive Automotive Resurgence Strategy (CARS), to encourage local electric vehicle (EV) production. Target issuance of an approved EVIS is early next year.

Like CARS, EVIS will lay down time-bound, targeted, performance-based and transparent fiscal and non-fiscal support to attract investments in EV and EV parts manufacturing, particularly of electronic parts and other strategic components, such as batteries, charging stations, and testing facilities.

This time around, the DTI is looking at about P83 billion in fiscal support for EVIS, which is much higher than the allocated P27 billion allotted to CARS participants, of which only P18 billion is currently being availed of by Toyota and Mitsubishi.

Understandably, the scope that EVIDA seeks to establish is far wider. EV use in the Philippines is still in its infancy stage, with the hybrid and electric vehicle population still less than 20,000 units, most of them e-tricycles and small public utility buses, the latter intended to replace jeepneys targeted for phasing out.

Huge potential

The DTI sees a huge potential for EV manufacturing at the grassroots level, where a number of local EV brands that manufacture e-trikes and electric transporters have established stronger footing in the last two years under pandemic conditions.

Such local manufacturers are able to offer e-trikes, both for commercial and household use, at fairly affordable prices while technology adoption by owners have been relatively painless. The huge price hike in both diesel and gasoline pump prices in recent months has further endeared consumers to invest in e-trikes.

Expensive fuel is also a reason for the growing population of electric scooter or kick scooter users who have ditched their cars in travelling alone to work or pursue simple errands. Such micro-mobility believers swear that the investment in such transportation vehicles is not only worth the savings in fuel spending, but also time, considering the horrendous traffic conditions again in city streets.

DTI hopes that local EV manufacturing could expand to electric cars, which continue to be preferred by Filipinos. This scenario, however, is seen as happening in the medium term when the full force of EVIDA kicks in, and when more charging stations are made available for a bigger consumer base.

Generous provisions

EVIDA is expected to generously pave the way for the development of the EV industry in the Philippines through incentives for both investors and users while stipulating laws to support the development of an infrastructure network that EVs can thrive on.

Companies and government agencies are mandated to have EVs to up to five percent of their fleets, although certain sectors like tourism are encouraged to consider more EVs in their fleets in line with the thrust to become more ecologically and environmentally relevant.

Charging stations for EVs are also required in parking lots, malls, and gasoline stations, which would allow for a quicker build-up of a juicing network for EVs. Similar edicts are in place for charging stations and parking slots when constructing new buildings.

EVIDA, complemented by DTI’s EVIS, are envisioned to boost the country’s EV population to more than 400,000 by 2030, of which half would be plug-in hybrids.

Playing catch up

Last week, DTI announced the participation of the cities of Baguio, Davao, and General Santos, and the freeports of Subic and Clark in a $3.8 million project courtesy of the UN Industrial Development Organization (UNIDO) to help speed up EV adoption in the country through the provision of technical assistance in creating the necessary local e-vehicle policy environment and ecosystem.

Hopefully, this will provide better insights to hasten EV adoption in the country. In one of the studies commissioned for an EV industry development in the Philippines, the high price of battery-operated and plug-in hybrid electric cars constituted a major barrier.

The price of imported EVs are almost always double that in other countries, mainly because of taxes. Even those cheap EVs from China, when they reach Philippine shores, are still more expensive, although the small ones are already relatively affordable for starting families looking for their first car.

EVIDA is expected to significantly reduce import taxes on completely built-up EVs and to fully exempt taxation on EV batteries. These fiscal incentives, though, are still not enough for EVs to match the current prices of vehicles that run on internal combustion engines.

The global trend for EV adoption is unmistakably on the uptrend, but much remains unsure for the Philippines, specifically on how fast the newly passed EVIDA can influence EV adoption by a mobility-starved population.

Definitely, the pitch by DTI, through its EVIS, will require dangling generous incentives to lure in foreign investors. Lessons can be drawn from the automotive industry’s CARS, where only big players like Toyota and Mitsubishi found favor in investing billions to locally produce cars.

Balancing the liberal terms of EVIDA on EV importation vis-à-vis the EVIS incentives encouraging local production of EVs and EV parts and services will be a tricky act, something that must be well thought out lest it go the way of previous motoring industry programs when the goal of building a local car industry eventually went bust.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends, and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.