E-trike wave

e-trikeThe Philippine e-trike project majority financed by the Asian Development Bank (ADB) has galvanised worldwide interest with investors looking to contribute to the country’s budding electric vehicle industry.

“Toshiba, Panasonic, Samsung, NEC, Dow Kokam, Nissan and nearly most major producers of electric bicycle batteries out there” have visited the ADB and the Philippine Department of Energy, which will carry out an international bidding process in April for procurement contracts, Principal Energy Specialist Sohail Hasnie of the ADB, the mind behind the e-trike project, told Inside Investor.

Toyota, Nissan, LG Chem, Japan’s Uzushio and Prozza, and Terra Motors, the largest e-bike manufacturer in Japan, have also signaled interest in the project either as suppliers of other components or establishing factories with local partners, Hasnie added.

Introduced by the ADB in 2011 with an initial investment of $500,000, the 20 pilot e-trikes currently on the road in Metro Manila’s Mandaluyong City run on lithium-ion batteries and are due to be joined by 5,000 to 10,000 new units by March 2014 now that the project has proven to be technologically credible. Eighty per cent of the lithium-ion batteries for the project’s first phase came from South Korea or Japan.

Spawned off of an unsuccessful attempt by the private sector to jump-start the electric vehicle industry in 2009, the pilot e-trikes have already clocked in excess of 600,000 kilometers on the road, a stark contrast to those previously deployed with lead-acid batteries, which did not have access to a supply chain and ultimately sputtered off into disuse.

The lack of access of advanced technology to the private sector ended up causing more harm than good for the inefficient models, which could not manage long distances and created environmental problems.

Sohail Hasnie

Sohail Hasnie, Principal Energy Specialist of Asian Development Bank

“This is when we saw a niche where the ADB could bring in new battery technology—the lithium-ion batteries that Nissan Leaf, Chevy Volt and others are using, for example—and establish a full value chain,” Hasnie reminisced.

“Using supply and maintenance contracts with five-year warrantees, ADB and the Department of Energy will scale up the initial 20 pilot e-trikes now operational to about 100,000 over the next 5 years,” he added.

The ADB plans to contribute an overall $300 million to the $405-million project, with the Philippines Clean Energy Fund loaning the other $100 million and supporting the remaining $5 million through a grant, financing the e-trikes with lithium-ion batteries at about $4,500 per unit.

In the Philippine context, the e-trike is considered superior to electric cars, which average $40,000 per unit, as it is more suitable for shuttling passengers through the infamously narrow lanes of barangays (local districts) and has greater benefits on end-users.

“The ADB has put on-board chargers into e-trikes, which then can be charged through a standard power outlet at home, which is ready in two hours,” Hasnie explained.

However, the ADB e-trike project has been the subject of criticism, with observers deriding the initiative as a fanciful waste of money that will fall into corrupt hands or crowd out the local alternative energy vehicle industry.

“The program design and the loan package are riddled with problems and loopholes that defeat the objective of promoting and developing the alternative energy vehicles industry in the Philippines. It also leaves the project highly vulnerable to large-scale corruption,” the Philippine Inquirer has opined.

Playing to this comment, Hasnie said: “Of course, the local industry needs to be developed too and the Department of Energy and ADB don’t want to crowd them out, but our key concern is ensuring that drivers don’t need to pay so much. We want to keep enough incentives so that trikes can be produced here at an efficient cost so that everyone wins.

“Concerning corruption, we have transparent procurement processes that have been established over the years working with governments and civil societies. The payments will be made directly to the suppliers and the whole process will be transparent and competitive. The project will have independent consultants that will also monitor implementation on a daily basis,” he defended.

 

For comprehensive country and sector analyses of investment opportunities, high-profile interviews and rankings register for Inside Investor Intelligence