A.18 PASSENGER ELECTRIC MOBILITY IN URUGUAY

Vehicle fleet composition: Mixed fleet

Net oil trading status: Importer

Relative cost of vehicles: High

Uruguay has a mixed vehicle fleet, though cars dominate the mix (57.6 percent), followed by two-wheelers (40.2 percent),1 and buses (2.2 percent) (OICA 2020).2 Electricity is primarily generated from renewable sources (97.6 percent), including hydro (44.7 percent), wind (32.5 percent), and biomass and waste (17.5 percent).3 The national government has taken several steps to foster e-mobility. Measures encouraging bus operators to transition to electric vehicles include establishing tax breaks and subsidies for bus purchases. As a result of tax incentives and subsidies, the price difference between an electric bus and a diesel bus has become marginal to an operator (Bnamericas 2020). There is also an awareness program to encourage private operators to take up electric buses.4 In 2019, the first call for subsidies for the purchase of e-buses was launched under a specific e-bus subsidy regulation to replace 4 percent of the total bus fleet.5 There are several plans and ongoing programs: The MOVÉS project promotes the use of electric vehicles, helps banks develop green credits for the purchase of electric vehicles, and gives specific credits for medium enterprises.6 A vehicle manufacturing facility planned for Uruguay is scheduled to go into operation in 2024 with a product line of small electric cars and electric delivery vans (Randall 2021). The United Nations Development Programme is supporting the national government in developing sustainable and efficient urban mobility systems in Uruguay. The program focuses partly on reforming the current regulations and incentives for promoting electric vehicles in the public transport sector (MIEM, n.d.)

Despite facing relatively high vehicle costs, Uruguay presents many conditions that are more favorable toward electric mobility, including a mixed fleet and oil-importing status (figure A.18.1a). Electrification of transportation does not yet look economically favorable as a national strategy, largely because of the fact that the electrification of four-wheel vehicles is not attractive under current conditions (table A.18.1). By contrast, there is a strong case for adoption of two-wheel electric motorbikes (figure A.18.1b), which present a life-cycle cost advantage of almost 16 percent (over 30 percent in financial terms) and are relatively affordable with incremental capital costs representing no more than 1 percent of gross national income per capita. The case for electric buses is also good, offering life-cycle cost advantages of 7–8 percent, against an incremental capital cost under 30 percent, and these are more relevant to Uruguay given that they represent a much larger share of transportation than two-wheelers (figures A.18.1c).

The main externality benefits of electric mobility in Uruguay are associated with the reduced carbon emissions of buses (figure A.18.1d). Fuel cost savings are also important, despite the fact that electricity is taxed almost as heavily as petroleum at close to 140 percent. Considering also a 20 percent tax advantage in favor of the purchase of electric vehicles, the overall case for electric mobility in Uruguay looks significantly better in financial than in economic terms (figure A.18.1a).