New Research: Economic Viability Of EVs Is Strong & Improving In Many Developing Countries
The World Bank has just released a new research study on how developing countries can transition to electric mobility. The in-depth 228-page study explores cost-effective starting points for developing countries to meet electrification goals and to come in line with a net-zero carbon trajectory. Some of the starting points explored in the research are electric buses, which cover long mileage and offer high occupancy, and electric 2- and 3-wheeled vehicles, which also bring development benefits.
Electric vehicles are one of the most talked about instruments to set the world on a net-zero carbon trajectory. In low-emitting developing countries the transition to electric vehicles has added benefits, such as improved local air quality, last-mile connectivity in remote places, and reduced dependency on imported fuel.
Despite the obvious advantages, the transition to EVs is relatively low in developing countries. In 2021, there were around 6.6 million EV sales, with the bulk of these sales being concentrated in China, Europe, and the United States. With electric vehicles costing sometimes more than 70% more when compared to conventional vehicles, it creates a huge financial hurdle for the average consumer in developing countries.
The new report by the World Bank, titled The Economics of Electric Vehicles for Passenger Transportation, found that in many markets, the savings in fuel and maintenance costs accrued over the life of an EV more than offsets the relatively high purchase price. Also, when factoring in the health and environmental benefits, the case for e-mobility was already strong in about half the countries studied.
Once the viability of electric vehicles and the addition of more charging infrastructure becomes more available, it is expected that prices may continue to drop between now and 2030.
“We already knew that an e-mobility transition was important; with this research, now we know that it is feasible,” said Riccardo Puliti, Vice President of Infrastructure at the World Bank. “Our report makes it clear that all countries need a plan for incorporating electric vehicles into their strategies for sustainable mobility.”
Highlighting the economic case for e-mobility, the research also shows that there are several actions that governments and financial institutions can take to accelerate the transition to electric vehicles. The study shows that charging infrastructure can be up to 6 times more effective at encouraging EV purchases than subsidies. Leasing programs and battery recycling, along with bringing additional commercial financing to the market, helped in establishing an e-mobility transition.
The World Bank is already working with many client countries, including Senegal, India, Egypt and Brazil, Chile, Colombia, Rwanda, and the Philippines on projects to advance their electric mobility. One area in the EV transition they are focusing on is incorporating electric buses into the public transportation systems of large cities, while also making electric 2- and 3-wheelers an affordable, clean alternative to motorization.
“Mobility is a fundamental lifeline that connects people to jobs, education, critical services, and opportunities. But each year 7.8 million years of life are lost due to health complications arising from air pollution. There is an urgent need to lower emissions from transport, and all transport decarbonization tools — including e-mobility — are on the table,” says Cecilia M. Briceno-Garmendia, Lead Economist for the Transport Global Practice at the World Bank and lead author of the report. “For developing countries, the e-mobility transition is no longer a question of ‘if’ but ‘how’ and ‘when.’”
Source: World Bank
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