Niche for Electric Vehicles in Developing Countries
Electric vehicles (EVs) are gaining popularity in the transportation industry, but are still widely perceived as luxury vehicles. Despite high upfront cost, EVs make inherent financial sense in specific applications. The most impactful current application is in fleet vehicles due to considerable diesel fuel consumption and frequent starts and stops along regular routes. In these duty cycles, battery packs are sized to the duty cycle of the vehicles, allowing the fleet get full value from their battery packs. Motiv Power Systems, a Foster City startup, designs electric power trains for trucks and buses. The company targets fleet vehicles and uses a modular technology that can be adapted to existing chassis and can utilize a wide variety of batteries, motors, and other auxiliary components on the market. Vehicles ranging from school buses to refuse trucks are already on the roads with Motiv’s technology across the US, but this technology could make a huge impact, both environmentally and financially, in the increasingly fossil fuel–dependent developing world.
In countries like China and India, imports of oil have steadily risen over the last decade, compared to a slow decline in the US and Japan. Currently, China, the US, and India are the three largest importers of foreign oil.1,2 Heavy oil consumption that is widely unregulated can cause extreme air pollution, especially because smog regulations on vehicles in developing countries tend to be less strict. An air quality index (AQI) between 100 and 150 is deemed “unsafe for sensitive groups,”3 meaning that anyone with a respiratory or heart disease, as well as children and the elderly, should limit prolonged exertion outside. Nine cities worldwide have an AQI over 100, and almost all of the top 20 most polluted cities are in developing countries. Deli is ranked as the world’s most polluted city with an AQI of 153.4 Although Beijing is, on average, not among the top 20 most polluted cities, on December 7th, 2015, the city had to issue a smog red alert when the AQI rose to 200, bordering on “very unhealthy.” In response, the city restricted driving on certain days based on license plate numbers, and schools cancelled all outdoor activities.5 EVs are powered directly from the grid, while gasoline goes through an extensive extraction and refinement process before arriving at the pump. Several sources estimate that it takes 6 kWh of electricity to refine one gallon of gasoline.6 The distance an EV can drive on 6 kWh is comparable to how far a traditional vehicle can drive on one gallon of gasoline, so even in regions where coal and natural gas are used to generate the electricity, all tailpipe pollution is eliminated when driving an EV. More widespread use of EVs would help alleviate the environmental and public health catastrophes stemming from air pollution in the transportation industry without sacrificing usability or productivity.
Simple payback time (amount of time for cost savings to equal the additional upfront cost) is the key metric which determines if an EV makes financial sense. Outside of peak electricity usage hours, cost per mile for electricity is up to eight times cheaper than gasoline. The US Energy Information Administration’s Annual Energy Outlook of 2015 estimates the payback period for a fully electric midsize passenger car at 20 years,7 excluding any government incentives. Speculations out to 2040 show payback times only decrease to 19 years despite potential advancements in the electric vehicle industry. Trucks which have predictable routes with frequent starts and stops are ideal candidates for electrification, especially because engines are less efficient at low speeds. Motiv Power Systems has created a versatile powertrain that can be installed on existing chassis. With this flexible technology that interfaces with the standard vehicle body and dashboard, fleet owners are able to use electrified versions of their usual vehicles. For an electric truck which utilizes its full range of 100 miles each day six days a week, the payback time shrinks to approximately 9 years (see assumptions in Table 1). A large part of fleet operating costs is the rigid maintenance schedule on the vehicles and the facility, which averages to about $0.35 per mile. Motiv estimates that maintenance on an electric truck is about 1/3 the cost of maintaining a diesel truck, owing to regenerative braking, lower powertrain operating temperatures, and fewer parts that move and wear out. Brake pads and engine starters need to be replaced on a regular basis in diesel trucks that have frequent starts and stops. In electric vehicles, however, regenerative braking reduces wear on brake pads and the electric powertrain is not affected by frequent starts and stops. In some facilities trucks idle in their garages before starting their routes, which in turn requires a more powerful air filtration system than would be necessary with a fleet of EVs. Factoring in maintenance, the payback time for an electric truck drops to about 6 years. The more the batteries are utilized, the more the purchase makes financial sense. EV owners can profit from their large batteries by utilizing vehicle to grid (V2G) technology, storing electricity during times of lower demand and using it to supplement peak loads, or aggregating vehicles to provide ancillary services to the grid. There has been some discussion on how to bill for V2G, with some regional transmission organizations suggesting a fixed income based on the number of hours an EV is plugged into the grid and is available to provide auxiliary power. Calstart estimated the revenue for an EV equipped with a 15 kW charging system to be nearly $5,000.8 One of Motiv’s trucks with a 19 kW charger that has intelligent V2G capabilities integrated into the design that charges at low cost times and sells back to the grid at higher priced peak intervals could see net profits at $5,000 per year in California. Factoring in V2G brings the payback time for electric trucks down to about 5 years. Profits generated by V2G depend on the utility company and are different for each region. An EV fleet would be most successful in a city that has the ability to expand the capacity of the grid. Regions that have higher oil prices will also see faster payback times.
Table 1: Example payback time calculation for different EVs9
In the US, the most famous electric cars are often expensive vehicles for personal use, which have a high upfront cost and long payback times that don’t justify the purchase from a purely financial standpoint. However, using electric vehicles in place of fossil fuel trucks with regular routes, frequent starts and stops, and high maintenance costs shows financial returns between 5 and 7 years. When forward-thinking governments recognize the additional cost savings through better air quality and a more robust grid, they can provide additional incentives at the time of purchase, which further reduce the payback time. Since fleet vehicles are often in service for 15 years or more, the overall lifetime savings could be very significant. As volume increases, prices will continue to go down and payback times will shrink even further. Many developing cities around the world are relying more heavily on imported fossil fuel which brings extreme air pollution and leaves their economies sensitive to fluctuations in global oil price. Despite the often higher initial costs, electric vehicles have the potential to save money and help communities become healthier and more energy independent. Electric vehicles are making much more economic sense, and their environmental benefits will soon see them become widely adopted.
 "Oil Consumption per Capita (bbl/day per 1000 People), United States." IndexMundi. June 3, 2015.
 Jacobson, Louis. "15 of 20 Most Polluted Cities in World Are in India, China, Says Jim Webb." PolitiFact. October 13, 2015.
 Herron, David. "The 6 kWh Electricity to Refine Gasoline Would Drive an Electric Car the Same Distance as a Gasser?" The Long Tail Pipe. July 3, 2015.
Baseline gasoline car – Price: $25,000; MPG: 40. Electric car – Price: $41,000; MPG(equivalent): 125. Assumptions: miles per year: 12,000; gas/gallon: $3.90; kWh: $0.12.
 Kempton, Willett, and Jasna Tomić. "Vehicle-to-grid Power Fundamentals: Calculating Capacity and Net Revenue." Journal of Power Sources 144 (2005): 268–79.
 Data for Motiv Electric Ford E450 Repower: Internal Motiv estimates at modest production volume in 2018.
Cover image: "All-Electric Ford E450" by Motiv Power Systems.