economics of elecTric Vehicles for Passenger TransPorTaTion

FIGURE A.18.2 Investment and financing needs for EV adoption in Uruguay, 2030

a. Breakdown of investment needs (US$352 million or 0.45% of GDP) b. Investment needs potentially covered by carbon financing incremental vehicle cost 4Ws

Public charging infrastructure 3Ws and 4Ws

Public charging infrastructure e-bus

Public incremental vehicle cost e-bus

Private charging infrastructure

Private incremental vehicle cost 2Ws and 3Ws

Source: World Bank.

Note: Data in this figure represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. 2W = two-wheeler; 3W = three-wheeler; 4W = four-wheeler; EV = electric vehicle; GDP = gross domestic product.

Source: World Bank.

Note: Data in this table represent the “business as usual” (BAU) scenario minus the named scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. The green grid scenario assumes that countries achieve certain region-specific targets for acceleration of renewable energy, as defined by the International Renewable Energy Agency (IRENA 2020). The scarce minerals scenario assumes that battery cost will decline by approximately 7 percent annually. The fuel efficiency scenario assumes that the rate of improvement of fuel efficiency for the internal combustion engine fleet will double from 15 percent to 30 percent. The efficient bus scenario assumes a capital cost reduction of 35 percent in the procurement of buses as well as optimized bus routes to increase the annual mileage of electric buses. The taxi fleet scenario assumes that the lifetime mileage of intensively used commercial vehicles will increase by four times in each country, that public investment in charging infrastructure will double the fast charger density for cars, and that the maintenance cost for cars will be doubled (assuming two lifetime battery replacements). Results have been normalized by new vehicles entering the market in 2030. The “fiscal wedge” comprises net taxes and subsidies. Red and parentheses indicate negative value. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides; US$/Mpaxvkm = US dollars per million passenger vehicle-kilometers; n.a.= not applicable.

TABLE A.18.3 Supporting information on parameters and results for EV adoption in Uruguay

Overall

—of which 4W

—of which 2W purchase

—of which e-bus purchase

Fiscal

—of which vehicle duties

Other parameters

—of which vehicle

—of

—of which diesel taxes/subsidies

—of which electricity taxes/subsidies

Implicit carbon price (US$/ton)

—of which for 4W

—of which for 2W

—of which for

Pollution

—of

—of

Source:

Note: Red and parentheses indicates negative value. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; g = gram; GNI pc = gross national income per capita; ICE = internal combustion engine; kWh = kilowatt-hour; km = kilometer; MJ = megajoule; NOx = nitrogen oxides; paxvkm = passenger vehicle-kilometer; PM10 = particulate matter less than 10 microns in diameter; SOx sulfur oxides.

Notes

1. Two wheelers cover all motorized two-wheel vehicles registered.

2. Passenger cars sales from Uruguay Instituto Nacional de Estadistica (2020).

3. Data from US Energy Information Administration international database and World Bank.

4. http://www.uemi.net/montevideo---uruguay.html

5. Information from The World Bank Group.

6. Information from The World Bank Group.

References

Bnamericas. 2020. “Spotlight: The Future of Electric Vehicles in the Southern Cone.” Feature article, January 22, 2020. https://www.bnamericas.com/en/features/spotlight -the-future-of-electric-vehicles-in-the-southern-cone.

IRENA (International Renewable Energy Agency). 2020. Global Renewables Outlook: Energy Transformation 2050. Masdar City: IRENA.

MIEM (Uruguay, Ministry of Industry, Energy, and Mining). n.d. “Towards a Sustainable and Efficient Urban Mobility System in Uruguay.” Annotated Project Document template, Global Environment Facility and United Nations Development Programme. http://www.eficienciaenergetica.gub.uy /documents/20182/32151/pad_towards_a_sustainable_and_efficient_urban_mobility_system_in _uruguay.pdf/e828843e-3cba-4c67-aaed-0ddec3002774

OICA (Organisation Internationale des Constructeurs d’Automobiles [International Organization of Motor Vehicle Manufacturers]). 2020. “Global Sales Statistics, 2019–2021.” OICA, Paris. https://www .oica.net/global-sales-statistics-2019-2021/

Randall, Chris. 2021. “Spanish EV Startup Plans Plant in Uruguay.” Electrive.com, February 24, 2021. https://www.electrive.com/2021/02/24/spanish-ev-startup-plans-plant-in-uruguay/

Uruguay Instituto Nacional de Estadistica. 2020. Parque automotor del país según tipo de vehículo utilizado. https://www.ine.gub.uy/transporte-y-comunicaciones

A.19 PASSENGER ELECTRIC MOBILITY IN VANUATU

Country Typology

Vehicle fleet composition: Mixed fleet

Net oil trading status: Importer

Relative cost of vehicles: High

Country Background

Vanuatu has a mixed vehicle fleet with the largest share being buses (60.5 percent), followed by cars (35.6 percent), and two-wheelers1 (3.9 percent).2 Electricity is primarily generated from fossil fuels (85.6 percent)—mainly coal (85.6 percent)—and less from renewable sources (14.4 percent)—notably solar (7.6 percent) and wind (6.8 percent). There are no current transportation policies to promote the adoption of electric vehicles. The Intended Nationally Determined Contribution plan has set an ambitious target to increase to 100 percent the share of renewable energy by 2030.3 The plan targets reducing greenhouse gases by 100 percent in the power generation subsector and by 30 percent for the whole energy sector. A recent update of the plan (2020) has set the following target for electric vehicle adoption in the country by 2030: 10 percent of the public transport buses to be electric; 10 percent of the government fleet to be electric; and the number of electric two- and three-wheelers to be increased to 1,000.4 Electric vehicle penetration in the country has been extremely low. Recently, some private initiatives have taken place to introduce electric vehicles.

Overall Messages

Despite having some conditions favorable to electric mobility, such as a mixed fleet and oil-importing status, Vanuatu is held back by relatively high-cost vehicles (figure A.19.1a). Electrification of transportation does not yet look economically favorable as a national strategy. Even with buses, the economic case for electric mobility is only marginally favorable and turns substantially negative in financial terms (table A.19.1). For two-wheelers, the opposite occurs, with electric mobility being uneconomic, yet financially attractive (figure A.19.1b). In any case, the capital cost differentials associated with electric two- and four-wheelers, at about 30 percent, are unaffordable, representing 10–20 percent of gross national income per capita.

The externality benefits of electric mobility in Vanuatu are substantial only in the case of buses, which yield important carbon savings (figure A.19.1d). Otherwise, maintenance cost savings are the main advantage associated with electric mobility. Fuel costs do not typically present savings, because electricity is very costly and additionally taxed much more heavily than gasoline at 110 percent. This accounts for the unusual finding that the case for electric mobility in Vanuatu looks substantially worse in financial than in economic terms (figure A.19.1c).

The total investment needs associated with the 30×30 scenario amount to US$2.5 million per year by 2030 (or 0.21 percent of Vanuatu’s gross domestic product). Over half of the required outlay is associated with the incremental cost of public charging infrastructure for buses (figure A.19.2a). In terms of private investment, the most significant item is the incremental capital cost of electric four-wheelers (figure A.19.2a). Given that implicit carbon prices associated with electric buses in Vanuatu are negative (table A.19.3), there is significant scope to cover 40 percent of the incremental cost of electric buses through carbon financing arrangements (figure A.19.2b). However, for four-wheel electric vehicles, the implicit carbon price approaches US$1,150 per ton.

The overall economic case for electric mobility in Vanuatu is negative and certainly does not improve under more conservative assumptions about the cost of batteries (“scarce minerals” scenario) and the fuel efficiency of internal combustion engines (“fuel efficiency” scenario); however, it does become marginally positive with further decarbonization of the power sector (“green grid” scenario) (table A.19.2). On a positive note, the emerging advantage associated with electrification of buses can be as much as tripled through the more efficient procurement and operation of vehicles (“efficient bus” scenario). However, there is no real case for electrification of four-wheelers, even when it comes to taxi fleets and other intensively used vehicles (“taxi fleet” scenario). It is clear that electric mobility in Vanuatu needs to prioritize the bus segment of the fleet.

Figures and tables start on the next page.

Figures and Tables

FIGURE A.19.1 Advantage of EV adoption in Vanuatu, by type of vehicle a. b. c. fleetNet oil

Note: Data in this figure represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides.

TABLE A.19.1 Cost advantage of accelerated EV adoption in Vanuatu, 2030

Note: Heading colors: blue = excluding taxes and subsidies, gray = fiscal wedge, green = including taxes and subsidies. 2W = two-wheeler;

“Local externalities” comprises local (NOx, PM10, SOx) air pollution costs. “Global externalities” comprises global (CO2) air pollution costs. CO2 = carbon dioxide; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides. Red and parentheses indicate negative value.

FIGURE A.19.2 Investment and financing needs for EV adoption in Vanuatu, 2030

a. Breakdown of investment needs (US$2.5 million or 0.21% of GDP) b. Investment needs potentially covered by carbon financing charging infrastructure 3Ws and 4Ws

Source: World Bank.

Note: Data in this figure represent the “business as usual” (BAU) scenario minus the 30×30 scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. 2W = two-wheeler; 3W = three-wheeler; 4W = four-wheeler; EV = electric vehicle; GDP = gross domestic product.

Source: World Bank.

Note: Data in this table represent the “business as usual” (BAU) scenario minus the named scenario (averages over fleet additions). The BAU scenario assumes that no policy target will be imposed for electric vehicles and that vehicle purchase decisions will continue to reflect historical trends. The 30×30 scenario assumes that sales of electric cars and buses will reach 30 percent, and of two- and three-wheelers, 70 percent, by 2030. The green grid scenario assumes that countries achieve certain region-specific targets for acceleration of renewable energy, as defined by the International Renewable Energy Agency (IRENA 2020). The scarce minerals scenario assumes that battery cost will decline by approximately 7 percent annually. The fuel efficiency scenario assumes that the rate of improvement of fuel efficiency for the internal combustion engine fleet will double from 15 percent to 30 percent. The efficient bus scenario assumes a capital cost reduction of 35 percent in the procurement of buses as well as optimized bus routes to increase the annual mileage of electric buses. The taxi fleet scenario assumes that the lifetime mileage of intensively used commercial vehicles will increase by four times in each country, that public investment in charging infrastructure will double the fast charger density for cars, and that the maintenance cost for cars will be doubled (assuming two lifetime battery replacements). Results have been normalized by new vehicles entering the market in 2030. The “fiscal wedge” comprises net taxes and subsidies. Red and parentheses indicate negative value. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; NOx = nitrogen oxides; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides; US$/Mpaxvkm = US dollars per million passenger vehicle-kilometers; n.a.= not applicable.

TABLE A.19.3 Supporting information on parameters and results for EV adoption in Vanuatu

Overall

—of

—of

—of

—of

Other

—of

—of

—of

Implicit

—of which

—of

—of

—of

—of

Source: World Bank.

Note: Red and parentheses indicates negative value. 2W = two-wheeler; 4W = four-wheeler; CO2 = carbon dioxide; EV = electric vehicle; g = gram; GNI pc = gross national income per capita; ICE = internal combustion engine; kWh = kilowatt-hour; km = kilometer; MJ = megajoule; NOx = nitrogen oxides; paxvkm = passenger vehicle-kilometer; PM10 = particulate matter less than 10 microns in diameter; SOx = sulfur oxides.

Notes

1. Two wheelers cover all motorized two-wheel vehicles registered.

2. From Pacific Datahub, https://pacificdata.org/data/dataset/vanuatu-2000-2011-registered-vehicle

3. Intended National Determined Contribution (INDC), Ministry of Energy, Vanuatu, 2020.

4. Vanuatu’s First Nationally Determined Contribution (NDC) (Updated Submission 2020).

Reference

IRENA (International Renewable Energy Agency). 2020. Global Renewables Outlook: Energy Transformation 2050. Masdar City: IRENA.