Electric vehicles may be set to become a more familiar sight on the streets of Dubai. The emirate has one of the world’s highest car ownership ratios and the authorities are expanding the infrastructure for battery-run cars and introducing new incentives to encourage people to switch to more environmentally-friendly options.
Government-backed initiatives are already supporting the wider use of carbon-neutral and hybrid vehicles, but manufacturers have been slow to bring electric vehicles to the Middle Eastern market due to a dearth of recharging infrastructure and the widespread availability of cheap petrol. According to a report from the Dubai Roads and Transport Authority (RTA) in mid-March, the emirate had 1.4m cars for an official population of just 2.35m, almost double the 2006 figure and giving it one of the highest car ownership ratios in the world.
However, with the introduction of the initial wave of charging points and plans to roll out more across the emirate, this will no longer be such an obstacle.
The Dubai Electricity and Water Authority (DEWA) is leading efforts to develop the electric transportation segment. In February, the authority opened 16 public charging stations for electric and hybrid vehicles, the first of 100 it plans to have in operation across the emirate by the end of 2015.
In the Dubai Silicon Oasis free zone, the first of eight charging stations for electric vehicles was inaugurated in April. The charging stations, to be rolled-out fully by 2017 in conjunction with the Dubai Silicon Oasis Authority (DSOA), will be used by electric vehicles for security patrols and facilities management units. Mohammed Alzarooni, vice-chairman and CEO of DSOA, said the charging stations were a step towards reducing Dubai’s carbon footprint and in line with plans to become a smart city. “Electric transportation is the future and DSOA has begun introducing these technologies within the integrated free zone park in order to keep pace with changing trends,” he said.
The government is also looking at various options to make electric cars more appealing to motorists. In early April Saeed Mohammad Al Tayer, DEWA’s managing director and CEO, flagged the possibility of offering incentives to drivers of these vehicles such as reducing the Customs duty or subsidizing the cost for buyers.
According to Thomas Milz, managing director of Volkswagen Middle East, Dubai is an important testing ground for automakers, “because of the broad array of customers both in terms of purchasing power as well as geographic representation,” he told OBG.
“Recent developments relating to new infrastructure supporting new technology in the automotive industry is certainly encouraging when we reflect inwardly on our international product portfolio. Whether the demand for hybrid or electric models, on a retail level, changes as a result of the initiatives implemented by the government is a consideration for future developments within Volkswagen Middle East,” he added.
Part of the attraction of conventional cars is low fuel costs, with the emirate and the rest of the UAE enjoying some of the cheapest petrol prices in the world. This falls well below production cost, but the situation may change as the government considers cutting subsidies.
While it may be difficult to wean many of Dubai’s drivers off petrol or diesel, there could be strong potential for sales of electric or hybrid vehicles for some specific environments, such as university campuses, industrial and trade zones, or business hubs. In addition, if the Dubai government introduces some form of support for electric cars, either through cheap power or subsidizing purchasing costs, the appeal of plug-in vehicles may well be enhanced.
However, there are some concerns over whether electric vehicles are fully viable for use in the region: the extra drain on batteries to keep engines cool in the extreme heat lowers the range of the vehicles. One possible path being explored is hybrids, which offer both electric and conventional fuel options. It is a route that Dubai’s police force has chosen, having taken delivery of two BMW i8 high-speed hybrids in March and April. In addition, the RTA will conduct trials of an electric bus to determine its suitability for the public transport market.
Sales of electric vehicles, hybrids or conventional vehicles with lower fuel consumption could also be given a boost if Dubai and the rest of the UAE follow the lead taken by Saudi Arabia to set corporate average fuel economy (CAFE) standards for road transport – minimum performance and fuel efficiency requirements for all new light duty vehicles (LDVs) that will be phased in from next year. Fuel economy rates for LDVs on Saudi roads will be required to be at least 19 km per liter by 2025, up from present rates of 12 km. Though Dubai has not made a commitment to introducing CAFE standards, the determination to reduce fuel consumption could see it taking a similar route in the future.
Oxford Business Group