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Boom in electric cars will add US$1,560 million to Chile’s fiscal revenues within two decades

InvestChile - August,8,2018

Given the right conditions, between 25% and 40% of cars could be electric by 2040.

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If Chile implements measures to promote the development of electric vehicles, they could account for between 25% and 40% of cars on the road by 2040. Without this effort, however, the figure would reach only 15%.

This is the conclusion of an analysis, "Study of Electromobility in Chile”, carried out for the Energy Efficiency Agency by Swiss consultancy company EBP and sponsored by the Energy Ministry. It indicates that, within only just over two decades - by 2040 - the additional fiscal revenues generated by increased copper and lithium demand for the manufacture of electric vehicles will reach US$1,560 million per year.

This would be the case if electric cars achieve a 40% market share in the world and in Chile, which would imply an increase of 2.54 million tonnes in demand for copper. “There would, in addition, be returns on higher sales of lithium and possibly cobalt,” says the report.   

This penetration of electric vehicles would, however, mean a reduction of almost US$400 million in revenues from taxes on fuel (hydrocarbons). 

The net result for fiscal income is, in any case, positive, according to Energy Minister Susana Jiménez. “The spread of use of electromobility in Chile and the world is going to mean greater demand for copper and lithium. Remember that, according to estimates, 40% of lithium output will be being used for batteries for electric cars by 2025,” she points out.

She also notes that the expected reduction in fiscal revenues as a result of a drop in fuel demand is a sign that “we will have cleaner and less polluting cars”. 

According to the study, demand for electricity in Chile would be around 5,100 GWh/year if 40% of vehicles are electric, with over 280 million charging episodes.

Minister Jiménez emphasizes that, together with the Transport and Environment Ministries, the government is interested in promoting electromobility. This is reflected in the undertakings established in its Energy Route 2018-2022. “We have set ourselves the challenge of a tenfold increase in the number of [electric] vehicles in Chile over the next four years,” she says.

She adds that the government is working both on regulatory aspects and on standardization of the network of charging stations in order to ensure their safety. 

“The bill for an Energy Efficiency Law that will soon be presented to Congress is important,” she says. In one of its aspects, it would establish average energy performance targets for each make of car, which would “mean an incentive for improving the overall yield of cars on the road, with particular emphasis on electromobility, which would be taken into account in the average required of vehicle dealerships. There is a prize for selling electric cars,” she says. The government’s plans do not include economic incentives but Minister Jiménez is confident that the price of this technology will continue to drop.

Source: El Mercurio

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