I have no doubt that in the coming years, more and more Filipinos will switch to electric vehicles or EVs. But I also believe that hybrid is the better choice for vehicle buyers for now. And by this I refer to vehicles that do not require charging stations as they run on battery power only part time. The limited number of charging stations is the main issue.
While full EV remains an option, I believe buyers should also wait until certain “standards” are in place. Note that regulation changes over time, as EV technologies and the EV industry mature and EV and related products saturate the market. Along with regulations on standards are rules on use, taxes, seat capacity, vehicle configuration, etc.
Instead of the EV industry just lobbying for regulations that will help it “secure” a bigger market for EVs, perhaps it should also start advising policy makers on how best to ensure that EVs will be safe, comfortable, convenient, and affordable. In addition, there should be assurances that customer support and customer satisfaction will be ensured.
In the past, motor vehicles were taxed and licensed according to different uses and categories. At some point, excise taxes were based on engine displacement, also on seating capacity, and on use. Thus, vehicles with smaller engines, or those that seat more people, or those that are for commercial use enjoyed tax breaks. Tax changes occurred over time.
As for tariffs, vehicles that came from China, Japan, or other ASEAN countries are now given preferential rates based on trade agreements, while cars imported from other territories are charged higher tariff rates. In the end, the affordability of cars — or EVs — is much affected by government taxation and regulation.
Motor vehicles also pay different registration rates, depending on the type of vehicle. As I recall, commercial and utility vehicles pay lower registration fees than big sedans or luxury cars, and sports cars. Again, government policy — and its intentions — play a big role in determining how vehicles are taxed and priced, as well as their recurring cost of ownership and use.
This early, while the EV industry is still in the early stage, perhaps all these items should be standardized. One issue I see on the horizon is the matter of EV charging protocol or standard. This is not too different from the issue in the European Union (EU) which passed a law in October setting the standard for charging cables and charging ports for mobile phones and the like.
The new EU law requires the use by end-2024 of the USB-C standard for charging all small electronic devices. Apple opposes the law as it uses Lightning, its own proprietary charging connector. The same EU rule will also cover laptops by end-2026. EU also plans to adopt a single standard for wireless charging for electronic devices.
Given this development, it is not unlikely that there will be competition among EV makers as to what standard to use for charging EVs. After all, exclusivity results in limits or barriers to entry for competitors. But this battle for standards may be at the expense of consumers, who may be precluded from purchasing an EV of choice, primarily for limitations in charging facilities. This early, our policymakers and regulators should decide whether charging protocols in the country will be standardized, or a free for all.
Their decision will determine the direction of future EV infrastructure, particularly charging facilities. As the fuel industry grew in the age of the automobile, the EV charging industry will also grow exponentially as more EVs are sold locally. Charging stations to be put up nationwide should match the protocols used by EVs sold in the country. But this is not as simple as it sounds.
A report by Luc Olingajun in the online publication TheStreet noted that Ford and GM have both decided to adopt Tesla’s EV charging connector. This means that both carmakers will install in their EVs the plug produced by Tesla to connect an EV to a charging station. This is a major win for Tesla as it exclusively produces this plug. It will now produce more plugs than Tesla cars.
More importantly, with this decision, “starting in 2024, customers of [Ford and GM] will be able to recharge the batteries of their electric vehicles using the Tesla supercharger network, which consists of about 17,000 stations across the United States, making it the largest network of charging stations in the country,” TheStreet reported.
Access to “superchargers,” in particular, is important as these “can add up to 200 miles of range in just 15 minutes,” TheStreet quoted the Tesla website. The additional cost to Ford and GM is around $100 per vehicle to purchase the plug or “adapter” produced and sold only by Tesla. That is the cost of their vehicles’ access to Tesla’s supercharger network.
“This is a big win for Tesla and Musk, as not only are they finding a new revenue stream, but its EV charging plug is set to become the standard. Currently, there are two charging standards in North America. There is Tesla’s North American Charging Standard, or NACS, and the Combined Charging System, or CCS. The latter, which uses a slow-charging connector, is used by all other car manufacturers,” TheStreet noted.
It added that the CCS standard “is also the connector used by the public charging network, which currently has 54,000 locations according to the Energy department. The problem with the public charging network is that there are very few fast chargers that allow you to recharge your battery very quickly. There is a total of 7,400 public station superchargers using CCS” as opposed to Tesla’s 12,000.
And this is why I am pushing decision makers to look into this issue this early and decide whether the Philippines should favor one EV charging protocol over the other, or should it promote the use of NACS and CCS and all other emerging charging protocols. It will also have to set early on the necessary safety standards, not only for all charging systems that will be used locally, but for all EV batteries to be used in the country.
Similarly important is setting regulations and standards for battery replacement and disposal, and for dealing with accidents and fires involving EVs. In other countries, special containment units are used to secure and isolate EVs involved in accidents, because of the possibility of these vehicles bursting into flame. Special rules on recycling must also be considered.
To date, it is the Tesla, Ford, and GM EVs that are all set to use the Tesla charging standard. But Tesla is said to be inviting Toyota Motors of Japan to join its charging “coalition.” Then there are the Korean carmakers Kia and Hyundai that may be invited as well. VW, TheStreet reported, remains committed to the CCS charger and is building its own charging network.
An early indication of policy direction on EV charging standards will go a long way in helping the local EV industry grow. As the TheStreet report noted, “The charging network is one of the most important things in the development of electric vehicles. The automaker which offers batteries that can last a long time, i.e., allowing drivers to travel long distances with a single charge, and which has a large network of charging stations, and also allows the battery to be recharged quickly, has the advantage.”
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council