The business visit to China, aimed at promoting and attracting foreign investments, has sparked great possibilities in the Andean country. Not only could it integrate into the supply chain to supply BYD‘s plant in Brazil, but it could also pave the way for a regulatory framework that encourages the use of electric vehicles.
The regulation unveiled in the Asian giant is a proposal from the Minister of Transport and Communications, Raúl Pérez Reyes, who announced the intention to replace public transport units with electric vehicles in Peru. This is where financing from China comes into play, making the transition possible.
How will they do it? Pérez Reyes revived a bill developed jointly with the Ministry of Economy and Finance (MEF) to eliminate import taxes on electric vehicles destined for public transport.
In this vein, the focus is on promoting the transition to electric taxis.
“In Peru, we have more than 200,000 taxis. The minister has committed to initiating incentives for around 20,000 taxis to convert to electric vehicles. We have seen that BYD offers electric vehicles for $12,000 to the public in China,” reveals Karsten Kunckel, President of the Automotive Association of Peru (AAP), who was part of the official delegation.
In these meetings, Peru expressed its intention to be part of the logistics chain of the Chinese automaker BYD by producing wiring and supplies for the automotive sector, instead of just exporting raw materials.
The minister highlighted the economic and environmental advantages of electric vehicles, noting that they consume approximately a quarter of the energy of their internal combustion counterparts.
“From the AAP, we view this regulatory framework proposal from the Minister of Transport very positively, especially as it focuses on public transport. We have proposed an electromobility plan with much broader incentives, but we consider this at least a very positive first step,” he states in a conversation with Mobility Portal Latin America.
Despite these advances, the President of the Association emphasizes that significant challenges remain, such as the need to improve the country’s charging infrastructure.
Additionally, the complex political situation could influence the speed with which this law is approved and its provisions implemented.
“This incentive would be the first step to introducing electric vehicles in Peru. So far this year, we have only sold 180 units here, so going from 180 units to 20,000 is a challenge,” he warns.
While sales of electrified vehicles grew by more than 60% in the first half of the year, Peru lags behind neighboring countries, as its penetration levels are very low.
The difference? In Colombia, Mexico, and Ecuador, public policies drive the development of electromobility.
What the AAP proposes differently from the MEF to promote electromobility
The comprehensive proposal from the AAP, which is in an advanced stage in Parliament, includes VAT exemptions and tax relief for electric vehicles.
At first glance, it is legislation that covers a broader spectrum than just public transport.
In addition to tax incentives, it emphasizes the need to strengthen vehicle technical inspections and promote the disposal of old vehicles, which are essential for modernizing an outdated vehicle fleet.
Despite the progress, Kunckel argues that the current political complexity in Peru presents challenges in smooth communication between Parliament and the Executive, which could affect the final acceptance of the proposal.
Electric vehicles and a six-month balance
In the first half of 2024, 3,217 electrified vehicles were sold in the country, while in the first six months of 2023, there were 2,004 units. An increase of 60%.
“The performance of this segment of the automotive market is due to the fact that more and more companies in the sector are marketing electrified vehicles; between January and June of this year, we have had nearly 60 brands and more than 140 models available to Peruvians,” says Alberto Morisaki, Economic Studies Manager at AAP.
When broken down by type of technology, mild hybrids lead the way with 1,597 registrations.
They are followed by conventional hybrids with 1,297 vehicles, an increase of 38.8%.
Lastly, electric vehicles registered only 181 units, although compared to the previous year, the increase was 64.5%.
