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Saturday, December 2, 2023

The EV incentive gap

Innovations in battery technology for EVs are now solving the initial fear of limited range compared to the well-established refueling infrastructure of the internal combustion engines

The Department of Energy’s recommendation submitted to the Tariff Commission to include two-wheeled and three-wheeled electric vehicles in Execute Order 12 that provides zero tariffs on the importation of electric vehicles for five years is a commendable move.

It can accelerate the shift away from air polluting vehicles and make green transport modes accessible to the mass population.

According to DOE energy utilization management bureau director Patrick Aquino, they are confident that the TC will accede to include the incentive for e-bikes which is also being pushed by the National Economic and Development Authority and the Department of Trade and Industry.

In an earlier statement, the DOE said it is pushing for a faster rollout of electric vehicles in the Philippines to help reduce dependence on imported and expensive fossil fuels to promote environment friendly and energy-efficient technologies.

The target is to roll out over 2.43 million electric vehicles that would significantly cut down carbon emissions and bolster investments that would create a new EV industry by 2028.

Shifting away from fossil fuel powered transportation modes to electric powered technology is now a global trend with the biggest industry brands already in a technology race to develop the most accessible and usable EVs for the micro mobility market.

Thirty percent of global mobility comprise two-wheelers such as scooters, mopeds, and motorcycles which serves as an essential segment in the transportation network.

As we are already living with the effects of climate change, the environmental factor is already a strong impetus to shift to green modes of transportation, but an even more compelling reason for millions of commuters considering investing in e-bikes is the ever increasing price of fuel.

The price of oil and petroleum products are predicted by experts to increase further in the second half of this year because of the rising demand of the world’s biggest oil consuming economies like the US and China and the volatility of the oil market attributed to the ongoing war between Russia and Ukraine and the sanctions imposed on Russian oil which created a supply gap that other oil producing countries are not able to replace.

On Saturday, we were again hit by big price increases. Diesel went up by P4.10 per liter and gas by P3 per liter.

This was not enough as industry players have already announced yet another round of price hikes happening tomorrow for gasoline (P0.10 to P0.50 per liter), diesel prices (P0.35 to P0.65 per liter) and kerosene (P0.50 to P0.90 per liter).

According to the Oil Industry Management Bureau, this latest price jump of local petroleum prices has imposed a net increase of P20.60 per liter for kerosene, P26.25 per liter for diesel, and P14.70 per liter for gasoline.

This situation will further add to the daily cost of living of every consumer as the increase in the cost of fuel is soon followed by a chain reaction in the price of commodities and services as operation costs will be affected.

The cost of transportation is also a daily burden for all commuters.

According to a 2022 survey by the automotive industry in the Philippines, approximately 42 percent of respondents use public transportation while 22.3 percent of respondents preferred private motorcycles. The estimated number of motorcycles in the country is about four million or half of the total registered vehicles.

Innovations in battery technology for EVs are now solving the initial fear of limited range compared to the well-established refueling infrastructure of the internal combustion engines.

There are now EV batteries that can already run 80 to 120 kms per charge which is more than enough for the daily commute for most people.

The total cost of ownership of four-wheeled vehicles is still at the high end – early adopter level but industry players are promising more accessible pricing as technologies evolve and production expands to meet growing demand.

Retail prices of electric two-wheelers are already competitive compared to gas powered motorcycles and predicted to even be lower as battery costs continue, which used to be 35 percent of total cost, to go down.

EV manufacturing is attracting investments from private equity, venture capital funds, as well as smart-mobility service providers.

The potential of developing a local two-wheeled EV industry makes perfect sense given the demographic economics of the country and the over four million motorcycle users that can switch to e-motorcycles.

This is another strategic factor that should push the Tariff Commission to act fast on rectifying the exclusion of two- and three- wheeled EVs from the five years, zero tariff incentive.

Addressing this policy gap as soon as possible will be a positive disruption that can create a new economic pillar and will promote green manufacturing, green transportation, and a sustainable economic system that will help contribute to achieving net zero emissions for the planet.

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