Going nowhere

Lebanon is ill-prepared for electric mobility

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The latest move to encourage the use of electric vehicles (EVs) in Arab markets came in Dubai. Last month, the Dubai Electricity and Water Authority announced incentives for EVs that include exemption from road tolls and registration fees at the Road and Transport Authority, and free charging and parking at specially assigned locations.

The emirate expects to have some 32,000 EVs and hybrids on the road by 2020, and 42,000 by 2030. For Dubai, this actually seems a somewhat small proportion, given that data from the past few years showed that vehicle sales were around a million, and vehicle density is one of the highest in the world at 540 registered vehicles per 1,000 residents in an emirate with 2.8 million inhabitants. However, when compared with other countries in the region, such as Lebanon, Dubai’s EV initiatives appear strong.   

Lebanon was once a pioneer in terms of the import and sale of cars in the Arab world. Agents, dealers, and distributors played a valuable role in the introduction of the automobile to Lebanon and the entire Arab region in the beginning of the 20th century.

Today, about 100 years after the combustion engine started its worldwide conquest, the automotive era is changing radically with the introduction of hybrid and electric cars. This alternative fuel story began in the 1990s, when personal transporters (like the electrically powered chairs for seniors) and light EVs were patented, and a range of hybrid cars was envisioned and produced.

The grandfather of hybrids was the Toyota Prius, which combined a combustion engine with an electric powertrain. It penetrated markets around the world, and its success was most noticeable in countries where governments were aiming to reduce air and noise pollution by offering tax benefits and other incentives for buying “green” cars.

The race toward wide adoption of electric cars got a decisive second kick around 2010, when Nissan and Tesla demonstrated that plug-in electric cars could appeal to diverse audiences. More and more manufacturers jumped on the electric-mobility bandwagon around that time. The migration to electric mobility got a third, and probably decisive, boost last year, when a pile-up of embarrassing emission scandals created huge political pressure, and an increasing number of manufacturers and national policy makers began talking about phasing out the production of combustion engine vehicles over the next 10 years, or even sooner. Researchers suggested recently that the production of EVs, which has doubled every 15 months since 2011, would overtake production of traditional gas-powered vehicles in the coming 10 years.    

No incentives for EVs

Lebanon is lagging behind the global push toward EVs. Car importer BUMC, Lebanon’s Toyota and Lexus distributors, brought the Prius into local market in 2010, despite it not being provided with any advantage by the Lebanese government. Without tax benefits or other state incentives for low emissions, the Prius proved to be too expensive for the middle class.

Executive contacted 10 distributors and dealers to ask about the existence or availability of tax advantages or incentives for green cars. All the dealers confirmed the total absence of a legal framework that would boost the import and sales of hybrid cars or EVs.

One of the biggest obstacles to adoption is that electric cars are registered as fuel-powered cars, using a mostly abandoned system for taxing cars based on their engine capacity called fiscal horsepower. The Renault Twizy, for example, was registered in Lebanon in 2017 as a 10 fiscal-horsepower car, despite being an 100 percent electric plug-in car that is powered by a battery, weighs around 450 kilograms, and measures less than three meters long.

EVs are silent, do not emit any polluting gasses, and do not consume any fuel

Ultra-compact urban EVs, such as the Twizy can change the experience of the city, with lower noise pollution in the city center. In some countries, they can be driven with special licenses, and they are often incentivized by governments in various ways. EVs are silent, do not emit any polluting gasses, and do not consume any fuel.

While there are no legal prohibitions against EVs in Lebanon, the state offers no incentives for buying one. For any of the hybrid or electric cars in Lebanon, like the Toyota Prius, the Hyundai Ioniq, hybrid Porsches, or the Mercedes S400 Hybrid, the only advantage to the buyer is lower fuel consumption. But in terms of budget, these cars are more expensive than the same manufacturer’s equivalent models with combustion engines, and indeed more expensive than gas-powered cars with comparable performance.

The tiny Renault Twizy, for example, sells for approximately $20,000 in Lebanon, while in Europe it is sold for approximately $8,000. The high price makes it a luxury, defying the concept of an affordable electric car.

Even if one wanted to buy an EV here, such cars, especially affordable ones, are hard to find. Beyond the lack of government incentives, the other big barrier in front of the import and sales of electric cars is the absence of necessary infrastructure. In addition to the lack of recharging stations for EVs—which is a major hurdle in the transition to electric mobility in many markets—there is Lebanon’s notorious lack of a 24-hour electricity supply.

Hybrids already on Lebanon’s roads

All in all, the absence of a legal framework, infrastructure, and incentives for EVs make it easy to imagine why automotive importers like Natco and Sidia, which represent Kia Motors and PSA (Peugeot and Citroën) respectively, are very reluctant to invest in them. But these agents tell Executive that they are still planning to import Chinese hybrid or electric cars, noting that China is emphasizing the development of EVs in its automotive industry. They mentioned models like the BYD F3, Qin, and Tang, which are hybrids, and the BYD E6, Song and T3 electric models. The agents even plan to import electric buses, an area where Chinese products have an affordability advantage over European or Japanese EVs, which could at least partly make up for the lack of Lebanese governmental incentives for import customs or registration costs.

Executive contacted other dealers like T. Gargour et Fils, which sells Daimler-Benz and Smart cars, and Gargour Automotive Company which is part of the Fiat-Chrysler group.  Gargour Automotive Company noted that they are still reluctant to have more electric or hybrid cars in their showrooms, given that the Fiat-Chrysler group does not have an aggressive hybrid or electric cars strategy.

By contrast, Daimler-Benz and Smart already do, with vehicles like the Mercedes-Benz EQ, the S400 Hybrid, and the E400 Hybrid. Smart also introduced the fortwo and fortwo cabrio electric drive, which have a range of 100 kilometers.

In the hypercars and supercars sector, wealthy Lebanese have, or will have, access to hybrid supercars like the Ferrari LaFerrari, the Porsche 918 Spyder, and the McLaren P1. While doubts over the role of supercars in the advancement of electric mobility are in order, hybrid hyper- and supercars prove the appeal of this automotive technology to tech-loving locals with super-deep pockets.

[pullquote]There is not only need for a legal framework and an incentive framework, but also for a new frame of mind among consumers[/pullquote]

A new legal framework for EVs

Case in point: The Porsche Centre Lebanon has delivered four of the 918 Spyder’s total production run of 918 units. Taxes reportedly boost the local price tag of these hybrid supercars from somewhere around $900,000 to about $1.5 million. When Executive asked Selim Saad, advisor to the Automobile Importers Association in Lebanon (AIA), if there was a legal framework in sight that might boost hybrid and electric cars, he confirmed that the government has not sent any encouraging signals on incentives for EVs.

For hybrid and even fuel-combustion engines, Saad noted that Lebanon still has work to do to bring its fuel up to Euro 6 emission standards, as currently fuel used in Lebanon—petrol and diesel—is at Euro 3 standards, meaning it emits a far higher level of sulfur into the air. The Lebanese government is working with UNDP to make the market compliant with its international climate change agreements.

Distributors, consumers, and the AIA are working together through public-relations channels, and by  importing hybrid and electric cars to modernize the automotive frame in Lebanon. There is not only need for a legal framework and an incentive framework, but also for a new frame of mind among consumers. All evidence today suggests that the Lebanese government will have to embrace and adopt the hybrid and electric cars within a few short years, or else Lebanon will be left behind.