The Brazilian vehicle industry is watching the advances of developed countries in the retirement of combustion vehicles with a mixture of concern and hesitation, in view of numerous issues that need to be resolved before electrification can become widespread in the country.
Issues ranging from lack of standardization of battery charging sockets, absence of national component manufacturers, falling population income and even tax arrangements that cause competitive distortions between automakers need to be resolved so that the local industry accelerates towards new technologies. engines, see experts.
The questions are added to the waiting time for the electoral moment, since the two main presidential candidates have poorly detailed proposals for the automotive sector and what is known about them points in different directions.
Former President Luiz Inácio Lula da Silva’s (PT) campaign claims that it will propose a general “green” tax reform, which would push the productive sector towards an ecological transformation, which would, they argue, have an impact on the automotive sector, with stimulation of electrical transition.
On the side of the current government, the Minister of Economy, Paulo Guedes, has promised that, if he stays in office, he will promote the reduction to zero of the IPI – a horizontal policy, and not sectoral, which he believes will encourage national industry as a all.
Brazil has a circulating fleet of around 46 million cars and all this volume alone guarantees demand for an auto parts industry that claims to be concerned with the pace of change, but at the same time believes that the transition in the country will be more longer than in markets where the technology is developed, such as Europe and China.
“If there is not enough demand for electric or hybrid vehicles, there will be no production in the country… or if it reaches a certain sale or it is not worth making a factory”, said Gábor János Deák, technology director at Sindipeças, an entity that represents 500 national and international auto parts manufacturers.
Hybrid and electric sales have soared in the country, but still represent a small portion, just under 24,000 vehicles, out of the total of 1.3 million sold in the country from January to August, according to data from the Anfavea automakers association.
Deák stated that, despite the moment being of “attention” to the auto parts industry, the number of vehicles running in the country is currently enough for “20 years of production” in the auto parts sector.
“We want to put all the facts on the table to define the most appropriate solution for the country,” said the Sindipeças executive, citing that hybrid ethanol engines would be a more adequate response for a country of continental dimensions, without infrastructure and with a market consumer who cannot afford the prices of all-electric models without subsidies.
Part of the automotive sector in Brazil, for now, is inclined to define mechanisms that allow a long transition phase towards the electrification of the country’s fleet, starting with flex hybrids, which are a particularity of Tupiniquim in allowing the use of ethanol and gasoline, in addition to the battery, to move the vehicle.
The bet becomes evident amid plans by the industry to involve other countries in the hybrid flex technology, such as India, to prevent Brazil from becoming a niche in the automotive industry with its “green” combustion engines. “They (India) are at 10% ethanol in gasoline…and they can make progress on that,” Deák said. In Brazil, the percentage of anhydrous ethanol in gasoline is 27%.
In Brazil, among 16 automotive groups, only Toyota, since 2019, and the Sino-Brazilian Caoa Chery, since June this year, assemble flex-fuel hybrid cars, but with the main components, such as electric motors and batteries, imported in the absence of suppliers. locations.
“It is not possible to put electric vehicles in Brazil today. It will kill the combustion engine, kill the engine-shaft-transmission concept and we will lose half of the production chain”, said Aroaldo Oliveira, executive director of one of the largest metallurgical unions in the world. country, the São Paulo ABC region.
About 100,000 workers are employed by vehicle assemblers in the country alone, says Anfavea. Another 243 thousand people work for the auto parts sector, according to data from Sindipeças.
“In the car, the transition from combustion to electric has to be longer than in developed countries and that’s why we are holding a debate on the ethanol hybrid for people to have access to purchase and to think about the transformation of the production chain”, said Oliveira.
MORE QUESTIONS THAN ANSWERS
Over the last few decades, Brazil’s bet on flex-fuel engines was endorsed by government plans that included Inovar-Auto, from the years of PT governments, and Rota 2030, sanctioned in the Temer government in 2018, which had among the official premises strengthen local production and improve the efficiency of vehicle engines, reducing emissions.
The plans have effectively managed to protect the local market and lead to reductions in vehicle fuel consumption, but have so far not brought in production capacity for electronic components and batteries.
They also kept the local industry without products capable of more intensively serving markets beyond the South American region, where most of its foreign sales flow.
“Regulatory frameworks are interesting because you have the rule of the game foresight, facilitating investments,” said Milad Kalume, business development manager at automotive consultancy Jato do Brasil.
“But Brazil is a follower of technology. There is very little being developed here,” he added.
According to data from Sindipeças, the sector’s trade balance deficit in the first half grew 19.5% compared to the first half of 2021, to almost 6 billion dollars. Among the main imported items, electronic controllers for vehicle systems, for example, had an increase of almost 42% in the period.
“We stood still and were unable to actually develop an industry of semiconductors and electronic components. We did not develop the necessary technology,” stated Oliveira, from the ABC metallurgists’ union.
He cited the 2011 “Brasil Maior Plan”, in which the government of then President Luiz Inácio Lula da Silva, who is currently leading the polls to occupy the post again, sought to encourage an electronic components industry in the country.
Now, the PT team has signaled broader horizons than programs just for the automotive sector, in itself symbolic for the former president. Lula made a point of officially starting his campaign, in August, with a speech at the Volkswagen factory in ABC, in São Paulo, the region where he forged his career in unionism.
This Thursday, there was another signal from the PT to the sector. Candidate for the government of São Paulo and one of Lula’s closest advisers, Fernando Haddad signed a letter of commitment to encourage the auto industry in the state, with a promise to invest in technology to be applied in hybrid and electric vehicles powered by ethanol.
The PT’s conduct differs from the distance adopted at the beginning of Bolsonaro’s administration, although the current government has more recently supported industry issues, including approval of a program for recycling old trucks and reducing import tariffs.
“We saw the current government forceful from the beginning, saying that it was not going to invest a penny in the automotive industry,” said Kalume, from Jato do Brasil.
The general coordinator of Inspection of Automotive Regimes of the Ministry of Economy, Margarete Gandini, said, in turn, that it is up to the sector itself to discuss with the government about the future of the industry. She participated in the formulation of the previous Inovar-Auto and Rota 2030 plans.
“We have more questions than answers,” he said during an automotive engineering event in August. “The government does not produce cars. It supports what is created by the industry from research and development projects,” she said during the Simea 2022 conference.
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