Text written by Luís Felício - Executive Director of Galeazzi & Associados

I read an article on UOL - Universo Online, signed by Paula Gama, on 11/01/24, titled: "Why government rules could end current cars in up to 3 years." Another recent news was that Hertz sold 20,000 electric cars, whose maintenance is very expensive, and in the case of an accident, repair is almost unfeasible. And what is the environmental cost of producing the batteries?

Another article, this time from Bloomberg Línea: The transition to electric cars, to the detriment of polluting combustion engine vehicles, has encountered a new obstacle in the global market - drivers don't want to buy used electric cars... In the used car market, worth $1.2 trillion, electric car prices have been falling faster than combustion engine vehicles.

I ask, is the electric car the solution? Is there an alternative to make this project viable? That is the doubt.

Without wanting to engage in controversy with environmentalists, staunch supporters of renewable energies, the sale of electric cars is below expectations worldwide, and the low demand can be attributed to:

1- High initial cost: Electric cars have a higher initial price compared to combustion engine vehicles. In some countries, the price is subsidized. This can discourage consumers, even if long-term operating costs are lower. Since there is no usage history, there are many doubts about maintenance costs.

2- Charging infrastructure: The lack of a well-developed charging infrastructure raises concerns about the convenience and accessibility of charging electric vehicles. Question: How many of us who live in buildings have the structure to charge the car? How many charging stations do we know of? How long does it take to recharge?

3- Battery autonomy: The perception that electric cars have less autonomy compared to combustion engine vehicles can discourage consumers, despite many newer models significantly extending their range. On average, the battery is 30% of the car's cost. There are still many doubts about its longevity. Another looming problem is what to do with the batteries?

4- Lack of options and variety: In some markets, the variety of electric car models may be limited. The diversity of styles, sizes, and price ranges may not be as extensive as combustion engine cars.

5- Resale price: Second-hand electric car prices are plummeting, and as new sales are not meeting manufacturers' expectations, we are currently in the midst of a price war among manufacturers, affecting resale prices. Consumers buy cars, also considering the resale price since that value can be used as a down payment on a new car. In China, abandoned electric car cemeteries have already begun to appear, and this phenomenon may spread to Europe and the USA.

6- Lack of knowledge and uncertainty: Many people still have doubts about the performance, durability, and maintenance costs of electric cars. The lack of clear information about these aspects can discourage consumers. How do subsidies work, will they continue? Tesla, BYD, Nissan Motor Corporation, BMW Group, Volkswagen, and General Motors are among the largest manufacturers. We need to monitor the movements of these companies.

7- Quality or Reliability Issues: Some cheaper electric cars have faced quality or reliability issues, leading owners to abandon them due to concerns about durability or maintenance costs.

8- Government subsidies: In some cases, electric cars were purchased based on incentives or subsidies offered by the government but may have faced technical problems or significant depreciation after the end of these incentives, leading to discontinuation. We all know how government subsidies work; one day they end.

9- What is the environmental cost of producing a battery? It is necessary to move about 200 tons of soil to find lithium, manganese, cobalt, aluminum, steel, plastic, etc. Are the tractors and trucks that move all this powered by "clean" energy? And the factories that process these raw materials, what kind of energy do they use?

10- New or existing technologies:

10.1 - Cars using hydrogen fuel cells to generate electricity, powering an electric motor. The main advantage is faster recharging time and greater range compared to batteries. The Toyota Mirai and Hyundai Nexo are examples of this technology.

10.2 - Hybrids, which have been around for some time: Vehicles that combine internal combustion engines with electric motors. There are different types of hybrids, such as parallel hybrids (like the Toyota Prius), plug-in hybrids (PHEVs), and mild hybrids, which use electricity to reduce fuel consumption.

10.3 - Fuel cell vehicles: In addition to cars, buses, and even trucks can be powered by hydrogen fuel cells. This technology can significantly reduce carbon emissions in large vehicles.

10.4 - Biofuels: Fuels derived from biomass, such as ethanol and biodiesel, can be used in internal combustion engines, reducing carbon emissions, provided they are produced sustainably.

10.5 - Synthetic gasoline e-Fuel: Fuel from a chemical reaction, dispensing with oil. It should be one of the future matrices. It is a sustainable alternative to power combustion engines since its carbon dioxide (CO2) levels are considered neutral.

The diversity of alternative technologies reflects the automotive industry's ongoing effort to find solutions that reduce dependence on fossil fuels and decrease greenhouse gas emissions. Progress in these areas is crucial to achieving sustainability goals and reducing the environmental impact of transportation.

I am not saying that this project should be abandoned, far from it. What I am saying is that this market is still not mature, as Toyota Motor Corporation CEO, Koji Sato, would agree.

There are still many doubts about the winning project. What is not in question is the end (sometime) of the combustion engine, the use of fossil fuel. In Europe, behind an electric charging station, there is a coal or oil power plant. My next car will be a hybrid.