The Colombian company maintains successful operations in its home country and Chile under a model that leases electric buses and charging infrastructure. Could it work in Peru?
Electromobility is one of the main drivers of the energy transition in Latin America. Its application represents a desire for an ideal future: that large metropolises leave behind millions of polluting vehicles in favor of eco-friendly options. One of the sectors targeted by this new vision is public transportation.
In fact, the C40 Cities organization estimates that by 2030, the number of electric buses will increase more than sevenfold in 32 cities in the region. This represents an investment opportunity of more than US$ 11.3 million, with Brazil, Mexico, Colombia and Chile being the most important markets. These four countries will represent 82% of the electric bus market in Latin America by the end of the decade, due to factors such as legislation favorable to the entry of Chinese and Western capital that is betting on this model.
One of the emerging players promoting electromobility in the region is VG Mobility, a company operating from Bogotá (Colombia). It currently has the support of Vitol, one of the largest independent energy traders in the world. In recent years, VG has invested a total of US$ 220 million in five operations linked to the electrification of buses in Colombia and Chile.
This program has led to the incorporation of 1,500 of these heavy vehicles in the Colombian capital and the addition of another 1,000 in the following two years. The company has also incorporated more than 400 electric buses in the Chilean city of Antofagasta, as well as an electric terminal in Santiago. Faced with these remarkable figures, one wonders what determines the company and its competitors' commitment to public transport to the detriment of heavy trucks and light vehicles.
“These last two sectors are lagging behind, because we still don’t have a good charging infrastructure. Buses are always at the same electric terminal, because they are vehicles that have the same route of 200 or 300 kilometers a day in the same city, unlike a car or truck that follow different routes every day,” declared Andrés Jaramillo, CEO of VG Mobility, for AméricaEconomía .
Added to this is the fact that the charging infrastructure requires an energy capacity that is beyond the reach of many citizens. For example, Jaramillo says that if all the residents of the same building buy an electric vehicle, it is likely that the energy capacity of the building will not be sufficient to support everyone.
Meanwhile, electromobility continues to make its way into public transport with revealing data. In November 2023, the E-Bus Radar platform released a report that counted 2,043 electric buses operating in Chile. This represents 40.8% of the total number of zero-emission buses circulating in Latin America. Even globally, this figure is only surpassed by China. In turn, second place in the region is occupied by Colombia, a country with 1,589 electric buses, which accounts for 31.8% of the total.
“The position of Chile and Colombia is due to political decisions. The governments of these countries understood that the total cost of operating an electric vehicle is lower than that of a diesel vehicle. They set up public policies that helped implement this type of vehicle and that made these countries develop very quickly,” explains Jaramillo. Although we cannot forget that the environmental issue weighed heavily: for example, in May 2023, Santiago woke up with the most polluted air in the world, according to a report by CNN Latin America .
Recently, the Chilean Senate approved the new Public Transport Subsidy Law, which modifies the use of the Regional Support Fund (FAR) or “Mirror Fund”. This is an initiative that was originally designed to decentralize investment in transport to the regions of the southern country. Now, under the changes agreed in the Upper House, 50% of the Mirror Fund resources will be allocated exclusively to transport infrastructure, fleet renewal or operating subsidies, as opposed to the previous 18%.
VG Mobility's expansion strategy is based on acquiring electric buses and delivering them to users on a leasing basis. But they don't just provide the unit, they also provide the charging infrastructure. "It's no use having a fleet of 100 vehicles if I don't have anywhere to charge them. So, our added value consists of delivering the complete solution in hand," says the company manager.
The other axis of growth aims to identify at a regional level operations with other fuels that are ending their useful life in order to begin implementing a transition to electric mobility. This is a slow process, since between the acquisition of a bus and the start of the construction of an electric terminal, it can take a year. Therefore, according to Jaramillo, a company should not make the decision to start the electrification of its fleet if the buses are already broken or reduced to scrap.
In response to the recurring comparison between electromobility and other alternative energy options such as natural gas for vehicles (NGV), the representative of VG Mobility maintains that electric vehicles have two advantages: they do not emit any sound, which prevents noise pollution.
In addition, electricity can come from different sources such as wind, hydroelectric and solar energy. “This allows for long-term energy contracts to be signed, setting the price for 10 or 15 years. This is something that cannot always be done with diesel or gas, because it depends on availability on the international market,” says Jaramillo.
ENTERING THE PERUVIAN MARKET
One of VG Mobility's major medium-term goals is its entry into Peru. Its general manager sees Lima as a city with a low population density but a very large territory. This means that the Peruvian capital has a huge number of public transport vehicles, including minibuses, buses and the Metropolitano, a rapid transit bus system.
“There are about 40,000 public transport vehicles, but with a more efficient system this number can be reduced by half. The idea is that the minibuses will begin to disappear and larger, electrified vehicles will be implemented that are operated by companies with payment methods that include an electronic collection card. This will allow people to move more calmly and avoid the risk of theft on buses and their drivers,” explains Jaramillo.
The Colombian executive maintains that the transformation of public transport in Lima-Callao should begin with the electrification of the terminals of the Metropolitano and the complementary corridors, a public bus system managed by the Urban Transport Authority of Lima and Callao (ATU). But as in neighboring countries, the materialization of these ideas depends on public policies.
“Peruvian authorities should be convinced that electromobility will not cost the city or operators more. To start with, however, they should lower the value-added tax (VAT) on the import of electric vehicles,” suggests Jaramillo.
Although on August 16, Marybel Vidal, executive president of ATU, announced the start of the renovation of 78 Metropolitan buses starting in the second half of 2025, with “high-level technology,” electrification is not yet a key topic of discussion. There is still a year to go before we know if Lima’s public transport will take the first steps towards the new system.
