Latin America faces many hurdles for electric vehicle market

31 October 2018 Authored by Consultancy.lat

The slow uptake of electric vehicles across Latin America is due to a number of roadblocks which look unlikely to change in the near future. Whilst the road to success may be arduous, there are a number of factors that may be tweaked to ease the process.

In Latin America, there are many obstacles preventing the widespread adoption of electric vehicles. In comparison to Europe, Asia and North America, Latin America’s level of infrastructure and economic diversity are holding the region back, with Latin America being one of the most unequal regions on the planet. The disparities between city and urban population, elite and other also limits the location of the customer base for extensive uptake. 

“Latin America suffers from the chicken-and-egg problem at a very early stage – not many electric vehicles are available since the public charging infrastructure is very limited and, in turn, the public charging infrastructure is scarce because there are too few EVs,” states a recent Author D. Little report titled ‘Electric mobility roll-out in Latin America – The arduous road to success.’

Public charging availability in Latin America

The consulting firm recounts its experiences with original equipment manufactures attempting market penetration in the region, the barriers and the keys to success. Latin America is unique in many ways and to successfully enter a product with so many variables such as full battery electric vehicles (BEVs), companies must have a comprehensive understanding of the market.

“Most Latin American markets have only had scarce experiences with electric vehicles so far. Many have not even seen plug-in hybrid vehicles yet, so importers and dealers are unable to build upon previous knowledge obtained in past rollouts. Subsequently, everything from standards implementation, dealer training and legal requirements through to aftersales challenges is new, and needs to be thoroughly analyzed and defined before the market introduction of a BEV,” the report says.

However, as is usually the case in Latin America, governments are not moving quick enough. Market penetration will presumably happen sporadically, scattered throughout society and confined to the affluent in a few major cities. The Authur D. Little report makes the assumption that EVs will predominantly be adopted as a status symbol.

Roll-out challenges in Latin America

Customer demand for BEVs is currently mainly driven by premium brand image, with the customers being affluent – less price-sensitive – concentrated in 2-3 cities per country, who drive an average of 30 km per day and who have access to private parking for vehicle charging. The report also states that it is likely that target customers will also have access to a second non-BEV for long journeys as charging outside these cities will be complicated at best, impossible otherwise.

The availability of charging stations and the power currents – which effect charging time – are also large factors of slow EV adoption across the region. The highly fragmented availability of public charging stations also becomes more complicated as BEVs from Europe, North America and Asia all have different plugs. Without defined government intervention to adequately regulate BEVs, it will be impossible to create continuity across the board. 

The region also faces a lack of stable power supply which can effect the charging times of BEVs. “Depending on the voltage and amperage available, this can mean power output from as low as 3.6 kW up to 22 kW for a privately installed EV charger.” The difference between these currents means that a 90 kW battery can take anywhere between 5 and 24 hours to charge. 

Success factors of BEV roll-out in Latin America

Other issues include, low levels of translations for premium solutions developed for western markets, a small number of local importers or dealers with experience to drive uptake (especially in smaller markets), and a lack of local partners willing to engage with companies including (often state-controlled) electric utility companies, gas station operators, and local transport and traffic authorities. All the variable factors combined add a significant barrier to market entry and widespread adoption. 

Despite these issues, the management consulting firm suggests that companies turn toward agility and adjust to regional pressures rather than put the pedal to the metal and proceed at full speed. “The local market conditions in Latin American countries limit the reasonable scenarios for the overall product portfolio: the offering structure needs to be carefully adapted to the local context – which often means reducing the line-up of products and services to affordable and technically simple and reliable solutions,” states the report. 

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