National Incentives for an All-Electric Fleet
National incentives and an increase in global EV interest have slowly changed the market. The South American average electric vehicle price increased by over 1,000 U.S. dollars in 2021, as the automotive industry recovered from the onset of the COVID-19 pandemic. More EV models than ever were available in Latin America and the Caribbean in 2021, up by 20 models compared to 2020. In this context, Brazil reported the highest electric vehicle revenue in 2021, at around 436.6 million U.S. dollars. Brazil was also the Latin American country recording the largest passenger car sales volume across fuel types. However, despite its strong financial performance in the electric vehicle market, Brazil is still behind other countries in Latin America on other fundamental aspects of the EV market.The state of the electric vehicle market is intrinsically linked to national incentives to propel it further. Brazil reported the region’s most significant renewable energy capacity at just under 160,000 megawatts in 2021. However, most of its electric vehicle sales were hybrid electric vehicles—primarily powered by their internal combustion engine—as the government faced pressure from lobbies against its 2018 Rota 2030 policy to stop ICE vehicle sales by 2030. Mexico, boasting the largest plug-in electric vehicle market in Latin America at over 4,600 sales of plug-in hybrid and battery-electric vehicles, offered varying private EV incentives depending on each Mexican state. It also reported the largest regional electric vehicle charging station network in 2021. In Colombia, the regional leader in the sale of battery-electric vehicles (BEVs), financial incentives—such as lower taxes on EV imports and preferential parking—detailed in a 2019 law have promoted EV sales. The same can be observed in Costa Rica, where tax cuts for buyers described in a 2018 law have encouraged BEV sales.
A Young Market Ripe for Competition
The growth of the electric vehicle market in Latin America is also an opportunity for automakers to increase their visibility within the region. As the market leader, Toyota held over 39 percent of the hybrid and electric vehicle market in Colombia in 2021, while its market share in the overall Colombian vehicle market was around 7.6 percent, behind its American, European, and Japanese competitors. Toyota had similar success in Mexico, holding nine percent of the total new light vehicle market in 2021. However, the country’s leading six hybrid electric vehicle models were Toyota models.In contrast, the electric vehicle market in other countries of the region is a reflection of the broader passenger car market: In Chile, Maxus, Volvo, and BYD were the most popular plug-in electric vehicle brands, reflecting both the increase in the global EV market share of Chinese brands like BYD and SAIC—Maxus’ parent company—and Chile’s preference for Asian passenger car brands across fuel types. Argentina records similar results. Toyota was the leading passenger car brand in 2021, and three of the five best-selling hybrid and electric vehicle models in Argentina were Toyota branded.
The global electric vehicle giant Tesla does not record the same popularity in the region. This is partly due to a late entry in parts of the Latin American market impacted by the pandemic and the lack of infrastructure for Tesla-branded vehicles.
