Feature - Opportunities and challenges in Sri Lanka’s EV eco system

As Sri Lanka stands at the cusp of a transformative shift towards electric mobility, the journey ahead is promising yet fraught with challenges. The emergence of electric vehicles (EVs) heralds a new era in transportation that promises significant environmental benefits and a potential reduction in the nation's dependence on fossil fuels. However, fully realising the potential of EVs in Sri Lanka requires navigating a complex landscape of technical, economic, and infrastructural hurdles.

This article, written by Prof. H. Niles Perera from the Department of Transport Management and Logistics Engineering, University of Moratuwa, delves into the intricate dynamics of the EV supply chain and examines the multifaceted opportunities and obstacles that shape the path to a sustainable and efficient electric mobility future in Sri Lanka. From the intricacies of developing a robust charging network to the governmental policies needed to stimulate adoption and the social implications of this shift, we explore the essential elements that will define Sri Lanka's journey towards an electrified transportation system.

 Q: How do you envision the transition to electric mobility, and what are its impacts on the supply chain?

Mobility has been a linchpin in global economic activity ever since the internal combustion engine (ICE) was invented in the late 1800s. Fossil fuel has been the undoubted source that empowers mobility for over a century, but the depletion of fossil fuel as well as the environmental concerns raised by its emissions, has given rise to a shift towards exploring how “new energy” such as electricity, hydrogen, etc. can power our mobility needs as the world grapples to meet the covenants of the Paris Climate Agreement and ensure that the global temperature increase does not exceed agreed thresholds. Out of these energy sources, electric vehicles (EVs) have been the most effective so far, with the user base growing steadily. EVs offer a very reliable and cost-effective mobility solution.

Q: Considering the current economic landscape, why should individuals adopt electric vehicles?

One of the primary advantages of EV usage is its cost-effectiveness. Even though many Sri Lankans are reluctant to adopt EVs due to various reasons, it offers a smooth driving experience with minimal maintenance. Furthermore, it has the advantage of being environmentally friendly.

Given that many major automakers are setting targets to cease ICE production within the next five to ten years, together with the continuous investments in EV supply chains indicates that EVs (and hybrid vehicles) would continue to gain traction in the vehicle market.

Furthermore, growing tensions on multiple fronts in the Middle East has given rise to an increase in fuel prices, if the situation persists, it makes economic sense in the long run to invest in an EV.

Q: What is the EV eco system and how does it affect Sri Lankan consumers?

An EV is comparatively less complex than an ICE vehicle with less than 20 moving parts within them. The centerpiece of any EV is its battery, especially, with new age manufacturers like global giant BYD which has pushed the industry to a new era with its innovative Blade Battery, which is far superior and safer compared to the existing batteries available on the market today.

The EV eco system refers to the network that connects all the stakeholders together into an effective streamlined platform. The supply chain is vital to ensure the smooth operability of EVs. The EV supply chain requires a reliable charging network, technicians and service providers who can maintain and repair EVs. It also requires cheaper electricity to support transition and adoption, this is probably a considerable challenge in Sri Lanka given the high electricity prices which aren’t projected to come down in the near future. Even though the cost of electricity is high, the cost of energy for an EV is still lower when compared with an ICE vehicle, for which the cost of energy as well as vehicle maintenance costs add up.

One should also appreciate the global players in the supply chain. Apart from lower energy costs for an EV another reason to switch from ICE is its environmental benefits. However, these benefits must be assessed across the lifecycle. This implies how the vehicles, their components, and raw materials are sourced. More importantly, measures need to be put in place to manage the life cycle of batteries, its recycling and disposal to ensure a truly environment friendly ecosystem.

Q: How can the government of Sri Lanka leverage electric mobility to reduce the country's dependence on traditional fossil fuels?

Already, a government policy is being formulated on the matter with leading experts in the field being engaged. As I understand, this will address the major concerns in the national fabric with respect to EV use and clear out some of the existing concerns. However, the government should take a step beyond that, in my personal opinion.

Many countries offer tax rebates for EV purchases. For instance, in Germany, rebates have increased purchases by over five times within the last few years. In Sri Lanka, those who are employed overseas are given a permit to import EVs. I believe this should be extended further to other sectors through a scientific study. Furthermore, ensuring that improvements to infrastructure and policy revisions go hand in hand would lead to a more seamless adoption of EVs.

Despite this, one needs to understand that the largest line item of our import bill is fossil fuels and reducing it would have a domino effect on the economy. Thus, a measured transition to EVs would provide solutions to several of our country’s pressing needs. Having said that, I think the most important task for the government is to ensure a reliable and low-cost supply of electricity, which includes supporting the generation of clean, renewable energy without disrupting system stability.

Q: In terms of policy and incentives, what strategies can the government employ to encourage the adoption of electric vehicles among the general population?

Sri Lanka has an ageing fleet of EVs imported over the past decade which require battery replacements. While there are solutions within the country, there is little assurance regarding the safety and standards of those. The government needs to start by providing secure solutions to existing EV users. While EVs were highly heralded during the fuel crisis, now a considerable social stigma has emerged given the end-of-life challenges faced by EV users in the country. Inability to repel this misconception with respect to EVs would deal a heavy blow on consumer perception.

Moreover, policies should be put in place ensuring a minimum standard for EVs entering the market which will limit inferior products. Supporting the growth of the EV ecosystem by paying special attention to the charging network, development of technicians and service providers is also of significance. I also believe that the government’s recent decision to tax household photovoltaic (solar) panels is detrimental in this context.

Providing tax rebates to EVs without making the above concessions to the ecosystem would fail in the long run. The devil is in the details, and the government should work with the industry and other stakeholders to develop consumer confidence to shift to an EV with confidence. With this, the government can consider tax rebates for EV purchases in selected sectors to promote EV usage.

Q: What are the potential new job opportunities and skills that will be developed in the country with the adoption of EVs?

I already emphasised the importance of developing a workforce that can cater to EV specific needs as well as in upskilling the existing workforce. I believe Sri Lanka has a bigger role to play in the EV supply chain which will lead to further job opportunities. On one side, our proximity to the fastest growing vehicle market and the east west shipping route provides a unique opportunity to attract investments in component manufacturing and beyond.

We already have several local manufacturers who have successfully built EVs at a commercial scale ranging from bicycles to golf carts – some of which are exported. Certain Sri Lankan last-mile delivery services use electric bikes for cost-effective and eco-friendly delivery which presents a unique business opportunity for restaurants and online businesses. The government must further encourage such innovative initiatives and try to attract further investments. This would lead to an uptick in job opportunities.

Q: Can you discuss the potential positive impact of electric mobility on Sri Lanka's commitment to sustainable and eco-friendly transportation?

Transportation is the largest pollutants in Sri Lanka. Moreover, it adds a massive strain on our import bill. A gradual shift to EVs would help Sri Lanka reach our Nationally Determined Contributions (NDC) relating to the Paris Climate Agreement more seamlessly. The reduction in direct emissions would be substantial but it would be even more eco-friendly if the national electricity grid could also shift to more eco-friendly sources that can support supply reliability. It would also help in alleviating high pollution levels (both air and noise) in parts of the country.