Electric cars are often touted as the nail in the coffin for gasoline-powered vehicles. However, there’s another fuel revolution in the developing world, which is changing the economics of electric cars. Whether it’s CNG, LNG, autogas, or propane, gaseous-hydrocarbon fuels turn conventional cars into dual-fuel vehicles, and limit the uptake of electric cars in these economies.
Tesla and the lost supercharger stations
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A quick look at the map of Tesla supercharger stations across the planet poses some interesting points: There are curiously few supercharger stations in south-central America, with only one in the Latin-speaking part of the new world. Few exist in Eastern Europe, Spain, Africa, the Middle East, India, or Oceania. This map can be correlated to GDP per capita, GDP, infrastructure, the country’s electric car incentives, and the uptake of dual-fuel vehicles. For the average consumer, it’s simple economics—their area of residence drives their vehicle fuel choices.
Balancing economics, power, and emissions
In developing countries, the choice to install a dual-fuel option is economics driven, rather than an environment-conscious one, according to the Natural Gas Vehicle Journal. According to the journal, most countries can expect a 40-60 percent reduction in fuel costs, which is more compelling in a second world where fuel costs are a larger portion of incomes.
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The vehicle fleets in these countries tend to be aging, and the choice between going electric or going LPG or CNG is often not tied to buying a new vehicle. Developing countries opt for a mixer-type dual-fuel system ranging in cost from $300-$1,000 with an average 25 percent power loss, while those going to dual-fuel in first-world countries opt for more expensive injector-type systems that result in a slight power increase – these systems average $6,000. Those touting electric cars often consider lifecycle costs of purchasing two new vehicles, while consumers in second-world economies look for cost reductions in the vehicles they currently own.
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Regardless of the type of dual-fuel system, these systems always have the side-benefit of reducing CO2 emissions. A 2009 EPA study found an 18-30 percent reduction in CO2, depending on the secondary fuel used. With a significant reduction in fuel costs, and tailpipe emissions, the economics for electric cars over dual-fuel cars becomes murky at best for many developing economies.
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Simple modifications, non-standard fuels
Switching petrol cars to dual fuel is relatively easy. To do so, the following components need to be installed: a new filling point, tank, ECU, injectors, reducer, pressure sensor and an electronic switch. Dual-fuel vehicles have switches allowing them to go from petrol to gas. Related: U.S. Production Is Falling, Why Isn’t Oil Recovering Faster?
Despite the relative ease of modification, there is a challenge in fuel standardization across countries. LPG, composed of 60 percent propane and 40 percent butane is more common in Eastern Europe, propane is common in North America, while in South America CNG is preferred. Unfortunately the ingenuity of these second world economies doesn’t come without cost. The cheaper systems often installed in the developing world, lax enforcement of laws such as mandatory five-year tank tests, and lack of awareness lead to many explosions of these cheaper systems.
Many countries have opted for dual-fuel vehicles, with South America being the most prominent region. With Brazil’s uptake in natural gas vehicles, it’s no surprise that Sau Paulo is the world’s largest city economy currently without a supercharging station. In oil-abundant Iran, natural gas vehicles proliferate, and government subsidies contribute to natural gas fuel prices being 75 percent lower than gasoline.
China looking to break the trend
The Tesla map has one glaring exception to the GDP correlation—China. Despite having almost 4 million dual-fuel cars, last year China quadrupled its electric car sales to over 330,000 vehicles. This was largely driven by government incentives and a limit on the number of gas cars in large cities such as Beijing. Electric cars are often the only options for those looking to drive in larger cities in China, where officials are looking to reduce pollution in its megacities.
Navigant research forecasts that Asia-Pacific regions will become more important for the Li-ion electric vehicle market in the next decade. In a country like China that already has a significant amount of CNG cars, it will be interesting to see how the market dynamics will develop as three different technologies fight for market share.
Although electric cars have made significant inroads to wealthier countries, there have been adoption challenges in second-world countries. Currently this is largely driven by economics, with the lower entry costs of going dual-fuel outweighing the long-term savings of electric cars. These trends are compounded by a lack of infrastructure, such as Tesla’s superchargers.
Long-term, carbon emissions plans and the COP21 Parris accord and its CO2 neutral mandate could push these countries farther toward dual-fuel, rather than electric. The earlier adoption of dual-fuel vehicles was limited in the first world due to regulations driving up installation costs; while in the developing world, dual-fuel cars could have had a human cost linked to a lack of regulation. There is one given with both electric and dual-fuel vehicle adoption: the world’s oil consumption will be adversely affected.
By Matt Slowikowski for Oilprice.com
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