Fast-tracking the development of the electric vehicle industry

The Philippine government has crafted policy directions that could fast-track the development of the electric vehicle industry, but it needs to be implemented through strong collaboration between and among government agencies, the private sector, and academe.

This was the core message of keynote speaker Trade and Industry Undersecretary for Competitiveness and Innovation Rafaelita T. Aldaba at the Toyota Hybrid Electric Technology Conference last week.

Toyota Motor Philippines Corporation (TMP) held the conference together with government representatives, environment groups, the media and other stakeholders to present the global Toyota Environmental Challenge 2050, and to drive home the point that vehicle electrification in the Philippines should start with self-charging Hybrid Electric Vehicles (HEVs) like the Toyota Prius and Lexus HEVs.

The Toyota Hybrid Conference was perfectly timed. It took place a few weeks after the Hyundai Kona Electric was displayed at the Manila International Auto Show in April; Nissan Philippines, Inc. announced that the Nissan Leaf Electric will be available before year-end; and Hyundai Asia Resources, Inc. launched and advertised the 2019 Hyundai Ioniq HEV at a price lower than the Toyota Prius sedan and the Prius-C subcompact hatchback.

70 PERCENT. Usec Aldaba said that as a signatory to the Paris Agreement that aims to reduce carbon emissions by 70 percent by 2030, the Philippines is mandated to adopt measures to encourage transportation electrification which would reduce greenhouse gas emissions and mitigate climate change.

At present, she said, vehicle emissions contribute 69 percent of air pollution in the country, 90 percent of which comes from Metro Manila.

But reducing vehicle emissions is not the only factor compelling electric vehicle (EV) adoption. Governments are also interested in economic benefits from EV manufacturing and EV infrastructure development, Usec Aldaba pointed out.

Thus, various agencies of the government like the Department of Trade and Industry, Board of Investments, Land Transportation Franchising and Regulatory Board, Department of Energy, Department of Science and Technology, National Economic Development Authority and the Tariff Commission need to work together and coordinate their respective policies and programs toward ensuring harmonized and effective support for the development of the EV industry and its allied industries, she added.

THE EV INDUSTRY AT PRESENT. Usec Aldaba reported that as of 2018, e-trikes accounted for 83 percent of some 4,362 registered EVs in the country. A significant number of the registered EVs are in public transportation such as e-jeepneys and e-bus/trucks.

There are 54 EV manufacturers/importers, 11 parts manufacturers, and 18 dealers/traders. With only 19 charging stations at present, the government’s goal is to have 200 charging stations by 2022 in SM and Shell gas stations, and to have around 10,000 e-jeepneys plying our roads.

Usec Aldaba expressed the belief that a conducive policy environment and support programs for developing the EV industry can not only further transform the Philippine manufacturing sector, but also prepare and upgrade the automotive industry as we enter Industry 4.0 (the fourth industrial revolution involving cyber-physical systems, Internet of things, cloud computing and cognitive computing).

POLICY DIRECTIONS. Although Usec Aldaba admitted that the PH government does not have a clear EV policy yet like China, Thailand and India, it is promoting the use of EV across the country via several measures, like the implementation of the Clean Air Act that replaced the Euro 2 emission standard with the cleaner Euro 4.

Another is EO 488, which provides zero tariffs for EV components and parts for the assembly of hybrid, electric, alternative fuel and compressed natural gas (CNG) vehicles.

The Board of Investments’ Investment Priorities Plan already grants an income tax holiday for EV manufacturing and charging stations.

The Department of Energy has deployed 100 e-trikes nationwide to replace conventional gas or diesel-fed tricycles.

House and Senate bills are proposing excise duty exemption, VAT exemption for raw materials, parts and capital equipment to be used in EV manufacturing, provision of space for EV charging stations, priority in registration and issuance of plate numbers, exemption from the number coding system, free parking, and priority in public utility vehicle (PUV) franchise application.

The government is also promoting the production of auto electronics, advanced driving assistance systems (ADAS) components, and electric motor powertrains like battery and charging facilities under the CARS (Comprehensive Automotive Resurgence Strategy) program.

Meanwhile, the Eco-PUV Program modernizing the jeepney is intended to help reduce air pollution.

Usec Aldaba revealed that currently, the Motor Vehicle Development Program is being reviewed to align its incentives with the realization of the Nomura Research Institute’s projection that by 2027, the Philippines can produce one million EV units.

She cited preliminary forecasts from the academe that the market shares of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) would rise gradually. By 2030, BEVs would account for 7.3 percent of total sales and PHEVs, 27.2 percent, and 1.57 percent and 6.1 percent of total stock. However, the share of internal combustion engine vehicles (ICEVs) would still dominate with 92.35 percent.

BUILDING THE EV ECOSYSTEM. Usec Aldaba said that the manufacture of EVs is among the priority industries under the country’s Inclusive Innovation Industrial Strategy.

“Our policy takes into consideration economic and environmental factors, as well as the impact of new technologies on automotive manufacturing and the global value chain,” she averred.

She emphasized anew that it is crucial to adopt a comprehensive approach to build the EV ecosystem by promoting consumer demand and incentivizing private investments across the value chain.

Research on country EV experiences show a whole-of-government approach is needed to implement vehicle and fuel regulations, incentive schemes, and build charging infrastructure, Usec Aldaba said, adding that stakeholder collaboration is needed to overcome barriers such as higher upfront costs, functional electric range and range anxiety, and lack of awareness of the benefits of EV use.

But the government is optimistic that the EV industry can grow, since a Frost & Sullivan survey revealed a significant latent demand for EVs in the Philippines, with about 46 percent of those surveyed wanting to buy an EV, Usec Aldaba said. This is higher than the Southeast Asian demand averaging 37 percent.

5 PILLARS STRATEGY. Usec Aldaba ticked off the five pillars of the country’s EV strategy:

First, the installation of standards and permitting protocols, establishing charging system requirements, aligning charging standard protocols with ASEAN standards, testing, and verification;

Second, removal or reduction of tariffs, implementing an EV program similar to the CARS and Eco-PUV modernization programs, providing incentives for parts and components, developing a charging infrastructure masterplan and incentives;

Third, research and development on EV and smart transportation;

Fourth, IEC program on EV regulation, operations and technicalities, establishing EV lead cities for testing of concepts and awareness promotion;

Fifth, a human resource development program to support both local and global requirements.

“All these would present opportunities for private collaboration and participation at a massive scale which could fast-track EV penetration,” Usec Aldaba concluded.

“This will facilitate the adoption of EV, new technologies and new business models in the sector. EV development can provide an opportunity for us to leapfrog to Industry 4.0 and allow further diversification of locally available fuels toward the realization of sustainable mobility in the country.”