A national renewable energy plan and economic incentives are some of the points discussed by the regional and Peruvian authorities of the Japanese automaker.

The automotive industry is evolving by leaps and bounds and its players are seeking to leave behind the exclusive focus on fossil fuels. Currently, Toyota, the Japanese automotive manufacturer that seeks to promote electromobility on a global level, wants to continue the path towards reducing CO2 emissions and thus move towards carbon neutrality in the life cycle of its vehicles by 2050.

It has been more than 25 years since the company marked a milestone in 1997 by launching the Prius, the first mass-produced hybrid electric model. This century is expected to mark a new turning point, when in 2025, Toyota and Lexus, its luxury brand, will have electrified options in all their ranges. Likewise, by 2030, the automotive giant expects to reach US$ 70 billion in electrification and annual sales of 3.5 million vehicles.

As for Latin America, it is not news that electromobility is at different stages in each country in the region. In fact, one of the most demanding countries for Toyota's aspirations is Peru. Although the Andean country is one of its main markets in Latin America, its electric charging infrastructure is still incipient. Although there are more factors involved.

“We must take into account the energy matrix of each country. For example, South Korea and Japan base their electricity on coal. In Brazil it is ethanol and in Peru, natural gas. Therefore, at Toyota we believe that we must devise alternatives based on these conditions.

"So in Peru, the transition solution to reduce emissions today is to focus on gas and hybrid vehicles, while we prepare for other technologies such as electric vehicles or hydrogen projects," explained David Caro, Marketing, Corporate Affairs & ESG Manager of the Commercial Division of Toyota Peru to local media.

Meanwhile, the sustainable approach is evident in initiatives such as sending nickel-metal hydride batteries to Japan for recycling through Toyota Mitsui, the automaker's partner . "We have to review not only the sale, but also worry about what will happen to those batteries afterwards. In addition, we are looking at circular economy projects with the Pontifical Catholic University of Peru (PUCP)," Caro added.

For his part, Rafael Chang, CEO of Toyota for Latin America and the Caribbean, said that the automaker's mission is to become a mobility company. It is a concept that encompasses a commitment to the environment at each stage of the value chain, in addition to adapting to the changing habits of consumers. "There are more and more customers who are probably no longer looking to buy and own a vehicle, but suddenly have more flexible options. So, that is another angle of mobility," said Chang.

LESSONS FOR PERU

Toyota executives highlighted the low market share of electric vehicles in Peru compared to neighboring countries. For example, in Brazil, these units already reach 10%, while Chile and Colombia have public transport services and hundreds of private units in their cities.

In contrast, Peru has a share of electric vehicles that only approaches a modest 4% of the market and has about 50 electric charging stations. However, Caro is optimistic and instead of defining the country as “backward”, he assures that it is in a process of electrification that will soon bear fruit. There are even recent studies that predict a promising future: the Automotive Association of Peru (AAP) revealed that sales of electric vehicles rose by 60% in the first half of 2024. At the end of May, the AAP proposed that all electric units be exempt from the Value Added Tax (IGV), something that was finalized in July for electric buses, by decision of the Peruvian Minister of Labor, Raúl Pérez-Reyes.

Both Caro and Chang believe that economic and non-economic incentives are key to the electrification of the vehicle fleet. “In terms of public policy, the reduction of VAT on electric cars can be applied, as in Ecuador, or the reduction of income tax for companies that invest in electric chargers, as in Colombia and Chile. We take these best practices and share them with the Peruvian government and Congress so that they can proceed,” said David Caro for AméricaEconomía .

Although the Peruvian State has shown interest in alternative energy sources such as green hydrogen, Caro regrets that there is no coherent national policy. “When talking with the Ministry of Energy and Mines, we noticed that they see the future of Peru based on natural gas. This is explained by the fact that Camisea reserves are guaranteed until 2033 and beyond. Other ministries are proposing other energies such as green hydrogen. In fact, they are now thinking of creating plants in the south of Peru, but there is no policy. The green hydrogen law was only defined a couple of months ago and the regulations will be published next year,” said the spokesperson.

Toyota Peru's Marketing Manager also highlighted the efforts of energy companies Enelex and Equans to expand charging infrastructure on important roads such as the Pan-American Highways South and North. However, there is again no clear goal to achieve 100% coverage in a given year. “In the case of Colombia, they gave incentives for the development of charging infrastructure in 2018, six years have passed and they have 250 charging stations. In other words, it is a process that takes time and Peru is no exception,” Caro clarifies.

THE ACTORS OF THE TRANSITION

On the other hand, Rafael Chang states that in order to understand the energy transition, it is necessary to take into account that there are three important actors. First, there is the government, which has agencies and institutions that must have articulated and harmonized public policies. This principle applies above all to the Ministries of Energy and Transport. The other two actors are the industrial and energy sectors, which must also cooperate with the decisions of the Executive.

“When we talk about electrification, the discussion is sometimes very polarized. But to really electrify and contribute to decarbonization, we have many technological options: from hybrid electric vehicles to hydrogen. Again, it depends on the speed of the infrastructure and the energy matrix.

Does it make sense to push for electrification when energy is generated from fossil sources? It would seem not, because to electrify you produce more energy and more emissions. So, there we talk about the life cycle: it is true that the vehicle has a level of emissions, but you have to add it to the energy generation,” Chang explained to AméricaEconomía . The regional CEO of Toyota asserts that each generation, regardless of its source, emits a level of carbon. Therefore, this “equation” must be kept in mind to understand the process of decarbonization and electrification.