The Project Manager of Bhutan EV (Electric Vehicle) Project, Sonam Tobgye, talks to Business Bhutan about the current status of the project to replace 300 taxis with EVs by September and how the Covid-19 pandemic hobbled the effort of the project.
Q. An additional 67 taxi drivers should apply for Electric Vehicles (EVs) to replace 300 taxis as aimed. Given that the project ends in September 2022, do you think the roll out/ replacement of 300 taxis with EVs is possible?
A. Despite the challenges imposed by the COVID restrictions, we are cautiously optimistic that all 300 EVs will be delivered on the road by September 2022. As of today, we have 233 confirmed bookings, meaning the EVs are either already on the road or being delivered. For the remaining 67, we will continue accepting registration, while going all out advocating and creating awareness.
Q. What are the struggles or challenges confronted by the project to make the transition to EVs?
A. As per the Electric Vehicle Perception statistical report published in 2019, the three significant challenges were:
a. Attitudes, misperceptions and low level of technical knowledge among the players in the EV market
There have been public concerns regarding the health and safety risks associated with battery-powered EVs, and its economic benefits. A variety of public shared misconceptions about the operation and maintenance of EVs, including its mileage, suitability for Bhutanese road conditions, technology, battery safety and disposal.
These concerns were relevant a decade ago, when the revival of EVs in the global market had just begun with nickel metal hydride or lead acid batteries for the first generation EVs. Today, we are referring to EVs that saw a generational shift in technology, powered by Lithium Ion/ Lithium Ion Phosphate or Blade battery technologies that have significantly higher energy and power densities and longer life span.
Furthermore, the global price of batteries has sharply declined in recent years due to the increased economies of scale created by a booming EV market. Majority of the EV taxis on our road can run anywhere between 300 to 520km on a single charge. And it turns out that due to its innovative regenerative braking system, EVs actually gain or recover their battery while driving downhill. Regenerative braking is an energy recovery mechanism that helps recharge the battery on its own while on the go and also reduces the brake wear, lasting longer than non-regenerative brakes.
EVs also come with minimal maintenance costs. The average EV engine has only around 20 moving parts, as opposed to more than 30,000 components in a typical gasoline-powered vehicle. EVs do not suffer the inherent wear and tear produced by engine explosions, vibrations, or fuel corrosion. Moreover, driving an EV is way more comfortable, due to the absence of vibrations or engine noise. All EVs come with a 120-volt level 1 portable charger that can be plugged into regular household power outlets. Although it takes a longer duration to charge, home chargers are used for overnight charging and helps battery life.
b. High up-front costs
The cost of EVs remains comparatively higher than the Internal Combustion Engine (ICE) vehicles, and therefore many do not wish to risk their investment unless they are absolutely confident of the returns.
Therefore, the government has come up with numerous policy interventions to provide both fiscal and non-fiscal incentives to the EV taxi buyers. The import of electric vehicles and charging infrastructure are exempted from customs duty, sales tax and green tax. In addition, the project provides 20% direct cash subsidy to the beneficiaries, up to a maximum of $5,500. Furthermore, the Bank of Bhutan Ltd. offers a 70% collateral-free loan through a group guarantee scheme for an extended repayment period of seven years. As a result, the beneficiaries’ actual upfront cost has been reduced to just 10% of the vehicle cost. And all public charging stations are free of charge for now.
C. Inadequate electric vehicle supply equipment (charging stations)
Prior to the start of the project in 2018, there were only five DC fast chargers installed in two dzongkhags. While the number of charging stations was enough for the small fleet of EVs then, it was clearly insufficient to fulfil the government’s ambitious plan for EV adoption. The project has installed additional 15 DC fast chargers and 13 AC chargers across seven dzongkhags as part of the first phase initiative. The Road Safety and Transport Authority (RSTA) is installing another 15 DC and 14 AC chargers in the remaining 14 dzongkhags. Therefore, in the next 3-4 months, we will have charging stations installed in all the 20 dzongkhags. Furthermore, some private EV local dealers have come forward to install AC chargers in some dzongkhags as part of their Corporate Social Responsibility efforts.
Going forward, the project will continue to install adequate charging infrastructures across the country, depending on the need and demand from the end users.
Q. How did the Covid-19 pandemic hobble the effort of the project? What is the status of the rollout presently and how does the road ahead look like for the EVs in Bhutan?
A. The Covid-19 pandemic undoubtedly had a severe impact on the implementation of the project.
The EV project was started in September 2018 with the support from UNDP-GEF, co-financed by RGoB. Just as the implementation of project activities was gaining momentum, WHO declared the outbreak of COVID-19 as a Public Health Emergency of international concern in January 2020. The COVID-19 pandemic affected the entire global value chain, and derailed the e-mobility revolution. The project activities came to a complete standstill, followed by indefinite halt on production and transhipment that lasted through the last quarter of 2021. Majority of the production facilities remained closed or were not able to attain full production capacity due to Covid-related lockdowns and restrictions. Even today, some countries have suspended operations of the EV manufacturing units due to stringent local rules to stem the spread of Covid. The pandemic also adversely affected the freight sector that faced continued disruptions to their supply chains.
With the entire EV ecosystem new to Bhutan, we do not have any experts in this field. We could neither hire experts from outside nor send our people for skills training. However, the project and its stakeholders endeavoured through these challenges and took it as an opportunity to learn on a trial and error basis.
Despite the hurdles, the visibility of EVs on the road has increased in recent months. Today, there are a total of 245 EVs including those owned by government institutions and private individuals. Additional 52 units of EV taxis are expected to arrive at the end of this week alone. With more charging infrastructures put in place, we are hopeful that there will be many taking interest in EVs. Currently, there are 10 different types of EV taxis being brought into the country through five local dealers. These vehicles are primarily imported from China, India, Japan and South Korea.
Q. What impact do you think this project is likely to have on people in the country?
A. In addition to the impacts/benefits mentioned above, hydropower has been a boon to our economy during the tumultuous COVID-10 period, cushioning the impact of economic downturn with gross revenue generation of Nu 30.152bn in 2020. The disruption in the global supply chain, soaring energy and commodity prices and resultant inflation in the market are of grave concern as they directly affect households and individuals. Switching to EVs will imply capitalizing on our own renewable hydropower resources to electrify the transportation sector, hence reducing dependency on the import of fossil fuels. This will, in many ways, help stabilize the market in terms of rationalizing the commodity prices. Furthermore, ICE taxis spend an average of Nu 1,000 per day on fuel alone, as opposed to zero cost on EVs.
The promotion of EV also syncs well with Bhutan’s outstanding green credentials. Besides the environmental benefits, EVs are expected to be the preferred mode of transportation in the tourism sector, as we see more international tourist arrivals in the coming months.
Meanwhile, the MoLHR has already introduced an EV Curriculum in the Technical Training Institutes. The idea is to train TTI graduates and automobile mechanics in operation and maintenance of EVs and related infrastructures to ensure a seamless transition to EVs.