Electric vehicles benefitting from favorable policies in Brazil

Brazil's electric vehicle market is set for growth thanks to supportive legislations, anticipated tax incentives and enhancements in vehicle charging infrastructure.

An estimated 35 electric vehicle models will be launched in the country, driving the market up to 80,877 units by 2020. Plug-in hybrids (PHEV) and range extenders will account for more than 70 percent of the market, according to Frost & Sullivan.

"Although Brazil's automotive policy towards EVs is at an early stage, the second phase of its Inovar-Auto program will provide incentives for EV manufacturers and end users, thereby encouraging adoption," said Frost & Sullivan Automotive and Transportation Research Analyst Ananth Srinivasan. "The expansion of EV charging infrastructure, currently focused on Sao Paulo and Rio de Janeiro, to other key regions such as Pernambuco, Sergipe and Ceara will further boost uptake."

This development, however, remains slow, pegging market growth back to an extent. The continued preference for flex-fuel over hybrid electric technology is another restraint. Additionally, the lack of localized battery technology and the high initial costs of acquisition will hinder market penetration in the short- and medium-term.

Nevertheless, Frost & Sullivan believes that partnerships with utility companies will provide the necessary support to widen electric vehicle charging infrastructure in Brazil, and improvements will gather pace by 2017. Local participants in battery technology development will have growth opportunities.

Moreover, product costs will fall on the strength of tax incentives. Frost & Sullivan's estimates point to a 25 to 37 percent reduction in PHEV prices and 25 to 40 percent reduction in battery EV prices over the next seven years.

"Product launches in the small- and mid-size sedan segments, maintaining a price bandwidth of $40,000 to $65,000 and offering diverse business models, are key success factors in the Brazilian EV market," said Srinivasan. "Market participants will also benefit from an early entry strategy."

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