Big bank NCB to back EVs
The electric vehicle market in Jamaica is yet to gain traction, but National Commercial Bank Jamaica, NCB, is looking to accelerate the pace at which consumers transition towards the greener alternative to gas-fuelled autos, with the roll-out of a specially designed loan product for the untested niche.
Vehicles that run fully on electricity — otherwise known as battery electric vehicles, or BEVs — are generally more expensive than traditional autos, and their numbers are negligible in Jamaica.
But some of the bigger car dealerships are in the process of testing market receptivity to EVs, and there is an expectation that, in line with global trends, the segment will open up eventually. NCB believes that will start happening next year, according to the bank’s Head of Retail Banking and Customer Experience, Sheree Martin.
“You have persons still in a wait-and-see mode as it relates to the purchase of full-electric vehicles, and so we thought it was important for us to step in early and hopefully, we will see some growing interest,” said Martin, who nonetheless was vague on the details of what research and analysis led the bank to make the bet on EVs in the context where EV-charging infrastructure is lacking, and policy formulation to drive business in the auto segment is a work in progress.
Investment in EV stations is under way by other investors to accommodate full EV vehicles, but just a few of these stations have been installed to date, compared to hundreds of petrol stations.
Hybrid vehicles, which can run on electricity or gas, are more populous, but also limited in number. Based on the fitness certificates issued, there are some 522,000 vehicles on Jamaica’s roads, according to Planning Institute of Jamaica data for year 2020, but industry operators estimate the population of full EVs at 30. Plug-ins are also rare, but there are thousands of hybrids on the market, with popular brands being Toyota Aqua and the Honda Fit, said Andrew Jackson, CEO of preowned-car dealership Jetcon Corporation Limited.
Martin did not produce any data on the EV market in an interview with the Financial Gleaner, when asked, but NCB appears to be banking on estimations that within a decade, there will be about 50,000 EVs on Jamaica’s roads.
Other lenders already write loans for hybrids, which generally run on petrol, but NCB, Jamaica’s No. 1 bank, seems to be the first to design a product to incorporate BEVs.
Its loan facility, ‘Drive Green, Drive Clean’, became available on Monday, November 1, and allows applicants to borrow up to $15 million for electric vehicle purchases at interest rates starting at 6.65 per cent, which the bank says are lower than what it offers for gas-fuelled cars. Regular auto loans from NCB are said to start at 6.85 per cent interest.
The bank has already approached car dealers Toyota Jamaica, ATL Automotive and Magna Motors to make a case on why it should be the preferred financier for the buyers of their EVs, Martin said. Over time, NCB plans to market the loan facility more widely to auto dealers, as well as broaden its target to companies and service providers whose daily business routine includes transportation.
The current loan product is exclusively for clients who will utilise the vehicles for private use. NCB will continue the financing of hybrid electric vehicles, which have gasolene as its main fuel source, and add plug-in hybrid vehicles and full electric vehicles to the list of the autos it will finance.
“We spoke to a few dealers and their feedback indicated that the market is in a nascent state. Hybrid vehicles are where we are seeing a lot more traction. However, if you think about the EV system that we need to get to the level of take-up that a Caribbean neighbour like Barbados has, we realise that we have to consider all parts of that ecosystem,” said Martin. “We recognised that the financing component is something that we can contribute ... that was the consideration that was given and the kind of analysis that we did,” she said.
To date, there are 10 publicly available charging stations across the island, three of which have been installed by the Jamaica Public Service Company, through the JPS Foundation; and seven by independent power provider Evergo, which is a sister company to Jamaica Energy Partners. JPS’ goal is to establish 10 stations, whereas Evergo wants to develop a network of 60 by year end.
Two of the top car dealers in Jamaica also have EV charging stations installed on their complexes.
The Jamaican Government is attempting to set the stage for the electric mobility market through its donor-funded ‘Building a Sustainable Electric Mobility Ecosystems for Inclusion and Access Project’. The Planning Institute reports that about 12 EV charging stations are to be facilitated under phase two of the project.
The importation of full EVs attracts duty of 30 per cent of the cost of the vehicle, while plug-in EV duties are applied at 38 per cent. However, car dealers are pushing for import taxes to be set at 15 per cent on full EVs, arguing that that rate would make the vehicles more feasible for car dealers and attainable for consumers.
Discussions are ongoing regarding technical capacity and training, as well as the rates consumers will pay for use of the charging stations. JPS is trying to shape charging behaviour with the announcement of ‘time of use’ rates, which will apply to individuals and commercial owners of the 50,000 electric vehicles projected to be in use in Jamaica by 2030.
That’s less than a tenth of the current motor vehicle population of around 522,000, and will take a decade to build out. Nevertheless, Martin says NCB sees benefit in being an early mover in the market, at a time when plans are under way to upscale it.
“If we think about what our role is in that ecosystem and what’s needed to allow it to mature, then we have to step up,” she said.
There are some early adopters of EV vehicles in Jamaica, but the market has been largely around the trading of hybrid vehicles for both personal and commercial use. Stewart’s Auto Sales is the first dealer to test the country’s readiness for full EVs with the Jaguar I-Pace, one of which it sold to the British High Commission back in April.
From as early as 2016, ATL Automotive has been marketing plug-in hybrid vehicles through luxury brands Mercedes-Benz C350e and GLC300e, Kia Niro, and the Porsche Cayenne. The auto dealer is now in negotiations with all its manufacturing partners, namely Honda, Volkswagen, Audi, Porsche, Kia, and BMW and MINI, on the introduction of full EVs to its line of vehicles.
Martin anticipates that a serious transition towards full EV purchase by the general public will not gather steam until mid-2022. Until then, NCB is trying to woo clients with the 6.65 per cent rate and waived commitment fees.
The bank also intends to package EV loans for distribution and courier companies, as well as taxi service providers, but that facility is not expected to come to market until next year.