2023

Global EV Transportation Review

Key Regional Markets

Chile

Chile’s National Electromobility Strategy puts forth the policy objectives to promote electric vehicles, as part of the steps at decarbonizing the transportation sector. Only electric vehicle sales will be allowed by 2035. The success of such policy goals will however be contingent on the timely investments in charging infrastructure and enabling a rapid adoption of the electric vehicles among consumers. The country has had encouraging progress in electric buses, due to the timely funding and budgetary outlays. The same might be required for developing the country’s overall electric vehicle ecosystem.

GDP (Current Prices) USD (2021)	316.77 bn
GDP Growth Forecast (constant prices) (2021-2025)	3.42%
EV Penetration	0.3% (battery electric) of the total new passenger vehicle sales in 2022
EV Target	Zero-emission transportation by 2035. No quantitative targets set
Planned Year of Phasing Out ICE Vehicles	2035

GDP Source: IMF, World Economic Outlook

EV Penetration and Trend

Note: The above data was categorized as ‘light and medium vehicles’ in the source
Source: National Automotive Association of Chile

The Chilean market’s electric vehicle penetration is negligible – barely 0.3% of the total 426,777 units sold in 2022 were based on batteries. It is thus a nascent market so far in transport electrification. The growth has been encouraging though, with electric vehicle sales registering a compound annual growth of 60% in the period of 2017-2022. The plug-in hybrids grew faster (99%) in the same period, partly reflecting the infrastructural barrier of charging provision and ‘range anxiety’ issues in retail sales.

The electric bus segment has been an encouraging one in Chile, led primarily by the expansion of fleet in the city of Santiago. This city, with an electric bus fleet size of almost 1,800, ranks among the leading ones in the Latin American region for its fleet conversion. Many other cities and provinces are following a similar path in expanding the electric bus network.

Charging Infrastructure

Source: BNA Americas (March 2022)

Chile’s charging infrastructure is predominantly composed of the slow Type-2 charging points. DC- based fast-charging is scarce and yet to gain traction in proportion to the total charging network. Furthermore, the public charging segment is a relatively minor part of the infrastructure deployment, pointing to limited scope of catering to rapid buildup in the electric transportation in future. The existing charging stations are skewed towards a few cities such as Santiago which gained popularity in recent years due to electric bus deployments.

Policy Regulation

The government policy framework has been largely responsive towards promoting electric vehicles. In March 2022, the Chilean government officially ratified the National Electromobility Strategy. A key takeaway from the official policy pronouncement is the targeted shift to zero-emission transportation by 2035, referring to the sales of light and medium vehicles (generally the passenger vehicles) and the public transport (buses, cabs and shared cabs). The policy had been on the anvil since October 2021 when it was first put out for public consultation. Its implementation is under the Ministry of Energy and will be subject to a review and update every five years.

Supporting the policy goal of phasing out the combustion-based vehicles, in October 2022 the government enacted the legislation for electric vehicles’ tax exemptions. With this, the electric vehicle owners stand to gain an exemption from annual road taxes for two years. Subsequently, a graded exemption level will be available – 75% exemption in years three and four, 50% in years five and six and 25% in the years seven and eight.

The recent legislative changes for incentivizing electric vehicles are not limited to the fiscal measures. The regulations also allow the electric vehicle owners to participate in the power market transactions (through battery storage capacity). Vehicle owners are entitled for incentives proportionate to the energy injected in the grid. This facility dovetails with the energy storage market regulations, where standalone storage is entitled for capacity payment.

Other select policy support measures were initiated to encourage the electric vehicle market. The Energy Efficiency Law enacted in 2021 provided for incentivizing companies to import electric vehicles, creating tax incentives for electric vehicle investments, establishing energy efficiency standards for new vehicles and regulating the interoperability standards of the charging systems.

Market Opportunity

Electric buses appear to show a better traction in the Chilean market than the passenger vehicles. This is observed in the fact of how Santiago (1,770 electric buses) came to the fore, as among the leading cities in the Latin American region for electric bus deployment. With initial funding support including that from World Bank (IFC) for establishing the viability, there is a better environment for attracting private investors in the space.

Reborn Electric Motors, founded in 2016 and later funded by Enel, emerged as a pioneering indigenous manufacturer of electric buses in the country. EnelX (subsidiary of Enel) and the bus operator service Metbus partnered in 2017 for a year-long Santiago pilot project for electric buses. Since then, the partnership of EnelX, Metbus and the Chinese manufacturer BYD, entailed delivery of 100 such buses. By 2023, the Santiago Metropolitan Region’s transport agency aims to place a 1,700-strong electric bus fleet. Leading equipment manufacturers and suppliers are gradually tapping into the demand. In August 2022, the Chinese manufacturer Foton wrote its largest overseas order of 1,022 buses for the city of Santiago. Other competing manufacturers such as BYD and Yutong continue to be similarly in the fray for the rising momentum of orders.

Note: Data reported as of June 2022.
Source: S&P Global

Though slow in picking up, the charging infrastructure shows some encouraging developments to suggest a rising interest from the private sector. EnelX had earlier launched fast-charging hubs in the country, which was a start for the segment in this market. In October 2022, EnelX Way and Volvo Cars Chile announced the launch of a public charging station, incorporating the JuiceBox technology. The inauguration marked the beginning of the planned 100 such charging stations envisaged by the partnership throughout Chile. Similar partnerships, if replicated, could potentially open the largely untapped space of public charging stations.

Chile is endowed with a significant share of global reserves in critical mineral resources. Most important among them is Lithium, where Chile’s leadership lies in both reserves and production. With Lithium as the mainstay of the battery storage technologies, there is a significant untapped potential for the companies to develop and source the mineral resource at competitive rates. The permits issued so far have been far and few and the competitive intensity thus remains on the lower side.

Note: Data reported as of June 2022.
Source: S&P Global

Outlook

The Chilean government target of 2035 to allow only electric vehicle sales convey the point to the industry stakeholders. It ties in with the decarbonization measures underway, especially in transportation. Public transport based on electric buses, is the most notable area where there is a visible progress in penetration and indicates a favourable outlook of expansion. The National Electromobility Strategy targets 100% electrification in the public transit buses by 2040. A sustained progress to the momentum achieved so far would entail getting private investment for local manufacturing and favourable incentives for the same.

Incentives, or their lack thereof, could also be a factor why the passenger vehicle segment growth has been relatively muted. Its growth, though encouraging, is far from making a dent in a market skewed towards the conventional platform. The demand-side incentives are thus important at such an early stage of growth to propel the market. An even bigger issue is the need for the charging infrastructure, where public investments might be critical to make the difference and attract the private investments in due course.

Chile’s policy and regulatory framework has been unable to exploit the opportunity in Lithium mining. It has been, for instance, lagging behind in presenting a clear framework for concessions to developers who can undertake commercial mining. The country’s rather unstable and uncertain regulatory framework led to investors considering other options. With Lithium is still important in the global energy scenario, it will be critical that the country expedites the regulatory process and issues the permits for investments.

Brazil

Global EV Transportation Report 2023

2023

Global EV Transportation Review

Key Regional Markets

Chile

EV Penetration and Trend

Charging Infrastructure

Policy Regulation

Market Opportunity

Outlook

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