Is the Gulf ready for eco-friendly cars
Norway is home to one of the world’s biggest oil reserves in the North Sea. However, while western Europe’s largest crude oil exporting nation is taking the same hit on barrel prices as the rest of us, it was also an early adopter of affordable, alternatively fuelled cars, long before the current petrol crisis hit fossil-fuel producing countries.
So it was an eye opener when we visited the country last year. Instead of the streets of Oslo being full of high horsepower V8, V12 and turbocharged petrol-engine cars as the Middle East is, the capital was full of Teslas, BMW i3s, Nissan Leafs, Toyota Priuses and other electric and hybrid cars. This is a country where zero-emission cars accounted for 17.1 percent of new car registrations in 2015, despite remaining a big player in the exploration of fossil fuels. It makes a good case study for this region as the UAE chases its green plan to be one of the leading sustainable cities by 2020 as part of Dubai’s “Vision 2021” plan.
That said, convincing someone to switch from a gas-guzzling V8 luxury car to electric could be a lot more difficult, given that our petrol prices have long been among the lowest in the world. Norway’s citizens have long been encouraged to lighten their carbon footprint thanks to its petrol last year being the most expensive in the world — at $2.33 per litre (compared to the current price of $0.37 here).
So how much of encouragement would the average UAE resident need to swap their humble four-cylinder runabout for an equally mundane electric car? This is a question that a number of car brands — and the UAE’s government — hope to answer with a range of new initiatives.
Providing the necessary infrastructure — charging stations and cars that can survive in this climate — is the first necessary step for green cars to be a feasible option. Last October, Volkswagen Middle East supplied 10 plug-in hybrid, petrol-electric Golf GTE cars to Dubai Municipality for a 12-month trial. The brand’s vehicles are undergoing urban evaluation, which includes range and hot weather adaptability. H.E. Hussain Nasser Lootah, director general of Dubai Municipality, has spoken about why the city entered into this partnership. “Dubai aims to become one of the world’s leading sustainable cities by 2020 and wide-scale deployment of electric vehicles is a key aspect to achieving this goal,” he said. “Volkswagen hybrid vehicles are in parallel with our strategic vision for the United Arab Emirates Vision 2021 and Dubai Plan 2021, which aim for an environment-friendly, smart, sustainable and connected city.”
But for full electric vehicles to meet Dubai’s 2021 Plan, there needs to be an established charging infrastructure. A network of 100 electric vehicle charging stations has just been installed across Dubai and now await the green light from the Dubai Electricity and Water Authority (DEWA). According to DEWA, about 60 chargers are mid-level stations in parking areas that take two hours to top up, while high-level chargers for petrol stations can recharge a car in 10 to 20 minutes.
In addition, there are about 40 new Green Parking car parks across Dubai that will soon unveil free charging for an introductory two-year period. “We have provided this infrastructure and taken the initiative to bring this to the country,” DEWA’s chief executive, Saeed Mohammed Al Tayer said. “This is the start of DEWA implementing a pioneering electric vehicle charging station infrastructure initiative. It is an important step towards achieving the objectives of a sustainable smart city and transforming Dubai into the smartest city in the world,” he added.
Motorists will soon be able to obtain DEWA cards for use at public charging stations which, along with home charging costs, can be paid with the regular monthly DEWA bills, while those without existing DEWA accounts can obtain an ID card and pay post-paid fees as per consumption, much like a phone card. “Most cars will be charged at home overnight but if they find the battery is low during the day, they can go to the closest charging station,” DEWA’s executive vice president of strategy and business development, Waleed Salman, said.
The Managing Director of BMW’s distributor for Dubai, Sharjah and the Northern Emirates, Mr Stathis I. Stathis, welcomed DEWA’s initiative to install the 100 charging stations, as it potentially opens an avenue to introduce the baby i3 city runabout. “The inauguration of the first electric vehicle charging station in Dubai is a momentous occasion for Dubai,” he said.
here is no getting around the fact that electric and hybrid cars are more expensive to buy than conventional petrol versions, even if there are savings to be made over time on fuel.
It means that governments cannot just install the necessary infrastructure and then expect people to switch. They need further prompts.
The success of Norway’s scheme stems from the generous incentive programme offered to those who choose the electric and hybrid path. To use the VW Golf GTE as an example, the local dealer in Oslo sells a regular diesel Golf for around $40,000 whereas a GTE plug-in hybrid is yours for about $31,000 after discount. Without the tax breaks it would be $10,000 more expensive than the diesel and you’d still have to pay for parking on the outskirts of town and the other sundries.
Further perks include free all-day parking in Oslo’s CBD with free charging. That basically means free commuting for the all-electric brigade as well as being exempt from all taxes, registration fees, road and ferry tolls. It’s as close to free motoring as you could expect, while also enjoying VIP parking spots at shopping malls.
The results of this programme speak for themselves. Beginning over a decade ago, official projections estimated there would be 50,000 electric cars on Norway’s roads by 2017, when in fact as of last April there were 66,000 electric cars, such as the Tesla and Nissan Leaf, with a further 8,000 hybrids such as the Toyota Prius.
This region will have to emulate some of these perks to encourage people to make a similar switch, as experts here have suggested. The Middle East regional director of the UK-based Transport Research Laboratory, Mr Akin Adamson, has called for subsidies on electric cars in the UAE. “There are a number of challenges that need to be overcome before we see mainstream adoption of electric vehicles in the UAE,” he said. “Electric vehicles are currently too expensive unless supported by government subsidies, so pricing needs to reduce significantly. This could, for example, be considered alongside discouraging the use of more polluting vehicles,” he added.
The recent launch of the Toyota Prius is an example of how the numbers stack up for transitioning towards green cars. Launched in 1997, the Prius has since sold over 3.5 million cars around the globe before making its UAE debut in February. It retails from Dhs89,900 with a 1.8-litre, four-cylinder petrol engine, helped along by an electric motor. By comparison, a 1.8-litre Toyota Corolla with similar dimensions retails from Dhs60,500, but is nearly twice as thirsty. Independent agency, Edmunds in the US claims the Corolla uses 8.8 litres of fuel per 100km, averaged over city and highway cycles, compared to 5.45 L/100km for the Prius. That gives the Prius a range of 945km, compared to the Corolla’s 690km, despite its 51 litre tank holding nine litres less than the Corolla’s.
What this means is that the petrol/electric Prius is a lot more economical. But at a Dhs29,400 premium over the Corolla, and with current UAE fuel prices at Dhs1.36 per litre, the difference in annual fuel costs (based on an average of 40,000km driving per year), will mean it requires more than 10 years of driving the Prius before you are financially better off in a hybrid over a regular petrol car in the UAE.
he costs of making the switch begs the most important question: if it’s not about pure economics, who are the potential customers in this region and what are their views on hybrid cars? Saud Abbasi, managing director of Toyota at Al-Futtaim Motors obviously has an idea of his target market. “We predict that the fourth generation Prius will appeal to young trendsetters who want everything that is new and cool with the added benefit of being environmentally ethical and brimming with technology,” he has said.
Presumably he is talking about early adopters of new technologies, and environmentalists who often willingly pay more to live a healthier, more responsible lifestyle. But as Mr Abbasi would agree, given the poor sales of the Lexus CT200h hybrid in the UAE, that’s currently a small market at best.
To find out more about what car drivers in the region think about hybrids, James Piecowye is a good person to talk to.
The presenter of Nightline on Dubai Eye radio, his show includes a weekly car segment. What feedback has he had from his listeners?
“There are a group of people who might be interested,” he told Esquire. “Mid-level managers, teachers, people who come from countries where eco-friendly vehicles are already widely used and who want to be at the front of the wave. Those people are here but it is a niche group,” he says.
But then he lists the most common objections to making the switch. Some of these are legitimate worries. “They may be installing charging stations in Dubai but what happens when you drive to Liwa, or you break down on the way to Oman?”
But there are also negative perceptions to overcome, some legitimate, others less so. “This is a climate where a normal battery only lasts for 12 to 18 months, so people worry about cars that run on them. They have actually been testing the technology here and in the Nevada desert climate, so they have worked through a lot of that, but there is still the mindset that it is too hot here. We’re all guilty of not realising how fast this technology is adapting. It works pretty well now, plus they come with a warranty of typically five years, so you’ve at least got fallback.”
He also notes how firmly drivers are wedded to the idea of driving a big SUV. That’s partly because it’s a car most people wouldn’t be able to afford in their home country. And there is also the perception here that driving a 4x4 is safer, given the erratic road habits here. In fact, as Piecowye notes, they are also prone to rolling a lot more in the event of a serious accident.
And finally, do people really connect with the issue of CO2 emissions here? Piecowye thinks not. “No one’s done a really good job of what that means right here. Hybrids make so much sense but people can’t quite rationalise why that is the case.”
So what could provoke a shift? Piecowye agrees that a government agency shifting to using a hybrid as a fleet car would “send a huge message”. However that comes with its own risks. “The Volvo estate is phenomenal but it is pegged as an Emirates fleet car. Same goes for the Camry. It’s seen as being the taxi car. Why are we not seeing more people in the minivans like the Toyota Previa? They are seen as hotel cars.”
Still, it might be a risk worth taking — especially for more elite fleet cars that spend 100 percent of their time commuting within the city limits. Add the incentives as a complete package and that’s when you start winning big time, chasing down Norway’s 17.1 percent zero emission marketshare as families and the middle management sector see it as a way to minimise and consolidate their monthly spend. And, as history has proven, once there’s an electric or hybrid car in the driveway with convenient fuel billing and parking, there’s usually no going back to the old days of fossil fuel.
So whether the UAE will follow Norway’s path in encouraging the next generation of environmentally savvy customers to buy a Prius in time to fulfil its Vision 2021 remains to be seen. But the at least the fuse has been lit.