Car dealers prepare for the drive to electric cars

Stephan Semurath, salesman at Lifestyle Motors, stepped on the accelerator of the company’s fully electric Porsche Taycan and the Solomon Hochoy highway instantly turned into a blur.

All 408 horses of the Porsche’s AC synchronous electric motors went straight to its tyres – since it was not an internal combustion engine, it needed no RPM to rev the engine and needed no time to accelerate, thereby giving the car instant power.

Although there was a manufactured engine sound, the car’s actual engine was whisper quiet. The car’s four-wheel drive and its adaptive air suspension management system made the ride smooth as silk – even on this nation’s roads. It also had a futuristic dashboard which did everything from controlling the air conditioning to controlling the height of the car to making hands-free calls. You could even talk to it.

Each feature came from a power source implanted to the bottom of the vehicle – a four cell lithium battery, which could basically be charged like most people would charge their phones.

This is the future of automobiles, said chief operating officer of Lifestyle Motors, Avinash Rampersad. Very soon, all new vehicles will have battery-powered engines, with access to electric power sources. With several major car companies like Porsche, General Motors and Toyota making the commitment to be fully electric by 2030, TT will soon be populated with cars that will be powered by electricity, rather than oil and gas.

These initiatives could have been the reason why the Prime Minister in mid-August warned that TT may not be able to depend on oil and gas revenue soon and would have to diversify its economy.

The Ministry of Planning, as well, in an attempt to meet the goals which would allow TT to do its part in taking the world to net-zero carbon emissions have put plans in place to increase penetration of electric vehicles.

But what does this mean for TT, which has been making strides toward turning into a CNG-driven nation? Business Day was told that while there will still be a place for CNG vehicles, TT will, like every other country in the world, have to develop the human resources, policies and infrastructure to keep pace with the world’s transition from internal combustion engines (ICE) or get left behind on electric avenue.

Shocking prices of electric cars

For now, the demand for electronic cars is mild, one of the reasons being that for the time being, electric cars are much more expensive than ICE vehicles.

For example, the price of a Kia Rio will be around $130,000 to $160,000. A Hyundai Ioniq, one of the cheaper and more popular electric vehicles, starts at around $260,000.

The Taycan goes for about $1.4 million

Automotive Dealers Association president Ryan Latchu told Business Day that for the moment the price points for clean energy units – including electronic and hybrid vehicles – are quite high.

However, he noted that there are still several factors that contribute to the price of cars and add to the car’s price.

He said there was a need for government to re-look at the way taxes are levied on clean energy vehicles.

Rampersad, in an interview with Business Day explained that clean energy vehicles like most vehicles are subject to taxes including motor vehicle tax, import duties and VAT.

“We pay import duties which is based on the cost, insurance and freight (CIF) which is the price of the car and the cost of shipping. We pay import tax based on the size of the engine. But the motor vehicle tax is really based on the fuel subsidy at the pump. If our subsidy is gone, why are we paying motor vehicle tax?”

These taxes, Rampersad said, could lead to customers paying over 200 per cent more for their vehicles.

“The Jeep Grand Cherokee for example, which goes up to 6.4 V8, based on the models you would pay about 67 per cent on the import tax. The motor vehicle tax would range between $50 and $75 per cc (cubic centimetre). Then you have the 12 and a half per cent VAT on top of all of that. So those taxes more than doubles the price of the vehicles.”

Rampersad said, for vehicles like the Jeep Grand Cherokee, they import them on order of the customers because of how expensive it is.

Rampersad added that even when dealers import a car with a smaller engine, the retail price would go down because the taxes would go down, but it would cost more CIF, which would mean that more foreign exchange would be leaving the country.

The Porsche Cayenne E-hybrid, he added is more fuel efficient than any other vehicle on the market, but it enjoys no tax savings because of its three-litre engine.

“So if you are giving incentives to bring in hybrid cars, you can’t penalise them because of their engine,” He said.

Current issues

Local new car dealers represent global auto brands, therefore their plans for transition would be integrated into the global approach to go from internal combustion to electric in less than ten years. But, just like Lifestyle Motors had to change several aspects of their infrastructure and re-tool their human resources, so to will the country need to have the people with the know-how and the technology to maintain, repair and manage each new electric vehicle, and the infrastructure to keep these vehicles running.

For Lifestyle Motors to even be able to sell the Porsche Taycan, Rampersad said they had to spend millions of dollars to make changes.

“We had to upgrade our electrical infrastructure,” he said. “We had to upgrade our transformers to handle the pull of current to the charging port.”

Rampersad added that they had to build new workrooms that are climate controlled so that technicians could work on the vehicle safely, safety and containment rooms in the event of a catastrophic event, and, as the battery pack alone could weigh about 2,200 kg they had to get all new equipment which would be able to safely transport and manoeuvre the car.

Most of all, they had to re-tool their technicians with the know-how to maintain and repair electronic cars.

“We spend millions of dollars a year training our technicians,” he said. “There is no oil filter to change in these things. If you touch the wrong wire in one of these cars, you could injure yourself as well as your co-workers.”

He said as the global effort to move toward electric and hybrid vehicles continue, all local dealers would eventually have to invest heavily in changing infrastructure.

“We here locally would have no choice to adopt similar measures and put additional capital to treat with these vehicles. Because if we don’t we would not be able to get that model of car.”

The juice is worth the squeeze

Rampersad said that despite the higher prices, electric cars would have a better effect, not just on the environment but on customers’ pockets.

“You don’t have to worry about oil filter changes, or engine oil or any of these things,” Rampersad said.

He said that the only downside to electric vehicles is, because the technology is relatively new, it is much more expensive. But this would mean that these vehicles will also come with a list of features which would save money in the long run.

For high-end cars like the Taycan, this would include an intelligent range manager, charging planner, route monitor and Apple CarPlay integration and a charge range (the distance one can travel on one charge) of more than 300 km.

The more economical Ioniq with a range of 250 km would also have similar features and would have similar benefits.

Rampersad noted that as the technology behind electronic cars becomes more available, it will eventually trickle down to the more economic cars. In that regard, there must be some adequate support services and quality standards services available to maintain them.