Brazil is preparing to receive a shower of investments to manufacture ecological vehicles: The world’s leading car manufacturers announced, one after another, huge outlays to develop hybrid models in the largest economy in the world. Latin America. Last week there were two almost simultaneous announcements.
On the one hand, the Stellantis group promised “the largest (investment) in the history of the Brazilian and South American automotive sector”for about US$6.1 billion between 2025 and 2030. The country will receive most of the amount, according to the government.
For its part, Toyota announced an investment of about US$2.2 billion in Brazil until 2030, largely for hybrids.
Other large manufacturers such as Volkswagen, Renault, Nissan, General Motors, BYD and Hyundai had also previously announced plans for the production of ecological vehicles in this country of 203 million inhabitants.
According to estimates by the National Association of Motor Vehicle Manufacturers (Anfavea), Brazil will receive around US$23.4 billion for the sector in the coming years.
Favor local production
The president of Anfavea, Marcio de Lima Leite, celebrated these investments “record” and sees “a strong possibility of new announcements in the coming months.”
“It’s not a coincidence,” he said at a press conference. According to Lima Leite, this wave of investments is particularly due to government measures that seek to promote local production of vehicles with less polluting engines. These initiatives gave “more predictability” to the sector.
Brazil plans “gradually increase taxes on the import of new technologies” to discourage the entry into the country of electric or hybrid vehicles manufactured outside its territory, the businessman explained.
In addition, a decree by President Luiz Inácio Lula da Silva established in December the Green Mobility and Innovation (Mover) program, which provides some 3.8 billion dollars in tax credits to manufacturers committed to “invest in the decarbonization” of its operations.
“Transition” model
“These investments mark a turning point, not only in terms of amounts, but also because of all the changes they will bring to the sector,” Cassio Pagliarini, of Bright Consulting, explains to AFP.
The hybrid is “a transition model”, since Brazil for now cannot massively switch to electric vehicles “because batteries are still too expensive”, he pointed.
And “the government does not have the means to provide important aid” to consumers, as several European countries do, he added. Added to this are the logistical problems of installing charging stations outside of large cities, in a country of continental size.
Thus, Brazil prefers to encourage local production of hybrid vehicles adapted to ethanol, a fuel whose CO2 emissions are reduced when compared to those derived from petroleum.
According to the last census in 2022, some 60 million cars were circulating in the country, less than one for every three inhabitants.
But less than 0.5% of these vehicles were “electrified” (including hybrids), according to data from Bright Consulting. On the other hand, sales of this type of car represented less than 5% of the total that year.
Demand, however, grew. In 2023, almost double the number of vehicles will be sold “electrified” lighter than the previous year: nearly 94,000 units, according to the Brazilian Association of Electric Vehicles (ABVE).
Based on the announced investments, Pagliarini projects that electrified vehicles could “represent more than half of sales from 2029”. Only “between 20 and 25% they will be 100% electrical, estimated.
And public transportation?
The executive director of Stellantis for Brazil, Carlos Tavares, considered last week that it is essential that these vehicles are “accessible to the middle classes (…). Otherwise, there is no (positive) impact for the planet.”.
The group, which concentrates 14 brands, intends to focus on technology “Bio-Hybrid”, which combines electrification and hybrid engines powered by biofuels such as ethanol.
Other giants, such as Toyota, Volkswagen or BYD, the Chinese leader in electric cars, have also announced their intention to manufacture hybrids using ethanol, produced in Brazil from sugar cane.
“Brazilian ethanol is a low-carbon fuel, which can be produced in already existing (productive) areas, without deforestation,” explains David Tsai, from the NGO Energy and Environment Institute.
Tsai is not convinced by the official strategy of granting tax credits to manufacturers: “It would be more interesting to invest in ecological public transport”he points out.
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Source: Gestion
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