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Wigton buys stake in electric car dealer

Published:Wednesday | March 16, 2022 | 12:07 AM
Managing Director of Wigton Windfarm Limited Earl Barrett.
Managing Director of Wigton Windfarm Limited Earl Barrett.

Citing a need to diversify, renewable energy company Wigton Windfarm Limited is entering the electric vehicle market via acquisition of a stake in an entity called Flash Holdings Limited.

Wigton’s 21 per cent stake in Flash, a holding company registered in St Lucia, will give it an equivalent share in its wholly owned subsidiary Flash Motors Company Limited. The cost of the transaction was not disclosed, nor were the other shareholders in Flash Holdings.

Flash Motors plans to sell EVs in Jamaica, Trinidad & Tobago and Guyana, said Wigton Managing Director Earl Barrett.

“I am very optimistic that the market will make EV the car of choice in the region, and we want to be a part of that,” Barrett said in a Financial Gleaner interview.

Wigton will “observe activities in Barbados” in order to gauge the EV market, but is already of the view that the high double-digit EV adoption rates make entry competitive.

Barrett declined to disclose the car brand to be sold until the press launch later in the year, but said Flash would be operating in the ‘new car’ market, and not the pre-owned segment.

Major automakers worldwide are in the process of phasing out gas engines for electric batteries, with some looking at a full switchover within two to three decades.

Tesla, the EV market leader, continues to sell at luxury prices in the region, and other EVs typically cost more than gas-fuelled cars; but Barrett said Flash’s cars will enter the market at a manageable price level.

Jamaica expects its population of EVs to grow to about 50,000 units in a decade, or about 12 per cent of the vehicles on its streets.

Right now, the local market is tiny, at about 250 to 300 units of EVs and hybrids combined, but Wigton, once a state-owned company that was privatised via the stock market two years ago, is entering the business just as the Jamaican government announced it would be reducing duties on EV imports, from 30 per cent to 10 per cent, to make EVs more affordable. The incentive will only apply to 1,000 units in order to contain the tax losses.

Wigton operates a wind farm in central Jamaica, which generates and sells electricity to the national power grid.

“The initiative forms part of Wigton’s diversification drive towards other renewable energy ventures to augment its core wind turbine operations,” said Barrett regarding the investment in Flash.

The company will also consider setting up EV charging stations, which may require it to buy electricity from the grid to sell to EV car owners.

Wigton has been hunting new sources of revenue, while dealing with various pressures on the business, including a lower rate paid for its power supplies by electricity grid operator JPS, from 13 US cents per kilowatt hour to 5.6 US cents, since 2020; declining output from some of its wind turbines that are nearing their end of life in 2024; and no opportunity to add renewable energy capacity since 2016.

“Wigton has put renewable energy on the grid, but nothing has happened since 2016. It stands to reason that Wigton had to diversify what we do,” said Barrett. “Wigton has to grow to survive,” he said.

The pace at which renewable energy is added to the energy grid is controlled by the Jamaican government, which has no set schedule for its tenders for development of new capacity.

Over nine months to December 2021, Wigton earned revenue of $1.58 billion, down from $1.94 billion a year earlier, while its profit halved to $277.5 million from $591.7 million.