Despite an expanding financial offer for the acquisition of electric buses and zero-emission trucks, Latin America faces significant structural barriers that slow down the energy transition.
A key study conducted by C40 Cities and the consultancy E-Mobilitas mapped 84 financial products available in Brazil, Chile, Colombia, Ecuador, and Mexico.
The research, based on 47 interviews with financial institutions and public data, reveals that Colombia leads the region with 50 products aimed at electric mobility, followed by Brazil (43) and Mexico (37).
However, this overall availability does not automatically translate into large numbers of electric vehicles on the road.
According to Gustavo Jiménez, CEO of Emobilitas, “the biggest barrier to promoting zero-emission mobility is precisely financing.”
Jiménez was emphatic in pointing out that, although electric vehicles are the future, “without clear financial structures, without solid operational models and without well-planned charging infrastructure, that future will not arrive.”
He acknowledged, however, that “there are already various institutions that have developed oriented and specific products to support the transition to electric or zero-emission mobility.”
How investment is made in buses and electric heavy transport
The study details that debt is the most common type of financing, representing 59% of the offer.
These products are mainly offered by National Development Banks (NDBs), Multilateral Development Banks (MDBs), and Commercial Banks (MDBs).
As explained by Jone Orbea, environmental consultant who was part of the research: “There are 84 products available; 59% of the products offered are debt, 18% equity, and 18% guarantees.”
She added that leasing “does have slightly greater specificity in freight vehicles,” being a product that is gaining affordability in the region.
Leasing, which involves a rental to use the asset, can be a flexible option requiring less initial documentation. Debt, meanwhile, allows ownership of the vehicle to be retained and works well for projects with predictable monthly cash flows.
Despite the fact that vehicles – buses and trucks – are financed in all cases by the products analysed, effective access shows inequalities.
Catalina Ricaurte, Senior Manager of finance for electric vehicles in Latin America, pointed out that the reason for the study originated in the “difficulty of accessing financing for fleet electrification” faced by small and medium-sized enterprises (SMEs) in the region, where they are the majority.
Gustavo Jiménez elaborated on this point, indicating that SMEs and individuals face an “access gap because it is more difficult for them to demonstrate their cash flow, their financial capacity.”
Trucks and charging infrastructure, a different world
Financing for electric freight transport vehicles is particularly nascent. This market is “very fragmented” with many owner-operators (micro freight transport companies), which complicates the entry of funds, according to the CEO of Emobilitas.
There is low demand and a notable lack of specific financial products for freight, which represent only 9.5% of the total mapped.
Jiménez described the situation: “Financing for last-mile, mid-mile and long-range freight vehicles remains incipient.”
“There is also a lack of financial products that adapt in some way to the technology.”
Unlike buses, where large operations have required “combinations of several banking entities,” freight financing has been carried out more by asset owners, equity investors and commercial banks.
Other critical factors for financing electric vehicles include charging infrastructure. Jone Orbea highlighted that “the pre-existence of infrastructure is the most prioritised element when assessing electric bus projects.”
Jiménez agreed, stating that “when there is clarity that companies already have a way to obtain their electrical infrastructure, financing flows faster, both for electric buses and trucks.”
Although some MDBs cover infrastructure, most financial products do not finance charging infrastructure, the second battery, operational facilities, or studies, all fundamental assets for the operation of electric vehicles.
Guarantees are another key instrument. Although Orbea noted that “it is still not considered a very large offer,” Jiménez described them as “key to unlocking the transport sector, mainly electromobility” given their function to mitigate risks, provide certainty to the project (and therefore vehicle financing) and even “reduce the interest rate.”
Some relevant data to consider from this research:
- Financing amounts vary, with MDBs focusing on projects above USD 10 million
- The most common maturity terms are between 5 and 10 years, which “may not coincide with the useful life of the vehicles”
- The USD is the predominant currency, while the euro “is scarce.” The most competitive interest rates are offered by MDBs
The study recommends improving and diversifying financial products, expanding risk mitigation tools such as guarantees, and strengthening institutional coordination to accelerate the transition to zero-emission transport fleets in Latin America.
