Towards an ‘Electric-City’

Bhutan has embarked on a mission to help mitigate climate change, and at the same time, curb the country’s Indian Rupee (INR) shortfall by way of encouraging the use of electric vehicles.

This is evident from the government’s recent executive order to lift the ban on electric vehicles, recent media reports on the Prime Minister’s meeting with international electric car manufacturing companies and his conviction to assist Thunder Motors Private Limited, the only electric vehicle assembly and manufacturing company in Bhutan.

On October 25 last month, Lyonchhen, in his speech as the first guest speaker at the inaugural of the “Friday Forum” lecture at the Royal Institute for Governance and Strategic Studies (RIGSS) has said he would reveal a project, for the first time to the public, one he was researching in the context of change. Lyonchhen said this was a project that aimed to work together, join hands to lead change and create opportunities.

He cited the example of battery-run cars as it was in line with the country’s policy of environmental conservation and as a possible remedy to the existing economic disorder.

“Assuming 2,000 petrol and diesel-run taxis were converted into electric ones in the next two years, we would earn Nu 568mn a year,” Lyonchhen told the more than 20 participants attending a senior executive leadership program at RIGSS.

He said the country earned less than Nu 9bn through export of electricity in 2012, but imported Nu 6.8bn worth of fossil fuel.

The Prime Minister, in his talk also introduced Dr Tashi Wangchuk, the owner of Thunder Motors as being more of a scientist than an entrepreneur. He also mentioned that the electric cars are not selling much.

Lyonchhen said Dr Tashi has ventured on a technology that is indigenous to Bhutan, and produced an electric vehicle at a cost below USD 10,000 and that the nation should assist him to build an industry that assembles and manufactures the country’s own cheap cars. “We want to lead the change from this and reduce imports, and create job opportunities,” Lyonchhen said.

Despite the recent ban lifts on electric vehicles, Thunder Motors is entirely focused on building electric cars rather than importing them for sale.

Talking to The Bhutanese, Dr Tashi said his company is working to come up with much cheaper and efficient cars. “We focus on cost reduction, and importing is not an option,” he said.

He cited examples of cheap electric cars such as REVA by an Indian company. “One of the world’s cheapest electric car like, REVA that can fit two people in it costs about six to seven lakhs (Nu 0.7mn). We are looking at building a five-seater full size car for the same cost,” Dr Tashi said.

Dr Tashi said Thunder Motors is currently working on research and development (R and D), and have already incurred huge costs. “Given all the time, resources like experts and many other factors we have incurred about USD 2mn in just R and D,” he said.

Dr Tashi said while vehicle parts such as batteries and motors are imported, the “main key component is made here in Bhutan.”

He also revealed that the first 50 vehicles shall be ready for sale by February next year. The company plans on keeping costs between USD 4,000 to USD 20,000 depending on the options.

Thunder Motors uses lithium iron phosphate batteries to replace petrol and diesel, and advanced computerized intelligent controllers for maximum efficiency.

With its vision to make Bhutan energy independent, reduce greenhouse gas emissions and to mitigate climate change, Thunder Motors has been developing electric cars optimized for use in mountainous terrain since 2009. The vehicles were officially launched in March 2012, and so far, the company has claimed that the cars have been performing excellently on Bhutanese roads.

“I would focus on the government’s plan to make Thimphu an electric city,” Dr Tashi said.

Recent foreign media reports

A month after Lyonchhen’s speech at RIGGS, international media reported that Lyonchhen met Renault-Nissan’s chief executive Carlos Ghosn for talks on the supply of cars and battery charging systems. There were also reports of the Prime Minister being in touch with other electric vehicle makers including Tesla of the USA.

Last week, the Financial Times, an Indian media house quoted Lyonchhen and other government officials as saying “the plan was to start replacing official government vehicles with the Nissan Leaf, an electric car, by March 2014 and that taxis and family cars would be gradually supplanted by locally assembled electric vehicles.”

The Times of India quoted Lyonchhen as saying, “Everywhere in the world it has been difficult because distances are longer and price of electricity is not cheap and there is lack of political will. Here in Thimphu, distances are very short, price of electricity is the cheapest in the world and political will is unto us. So, we are confident that electric vehicles can take off here.”

Lyonchhen was also quoted as saying, to kick off the plan, 100 taxis and some government vehicles in the capital city will be replaced with electric cars by February 21 next year.

Despite several attempts The Bhutanese couldn’t reach Lyonchhen who is currently on tour in his constituency.

Ban lift on electric vehicles

In line with its pledge to “lift the vehicle import ban for rural businesses and farmers to let them buy utility vehicles to facilitate rural development”, the ruling party, People’s Democratic Party (PDP) has officially lifted the ban on import of electric and utility vehicles earlier this month, in an executive cabinet order issued on November 12.

“Notwithstanding the existing ban on import of vehicles, the government has decided to relax the ban to allow import of electric and utility vehicles with immediate effect,” the government order stated.

Following a task force investigation on the Indian Rupee (INR) shortfall in the country, the former government, Druk Phuensum Tshogpa (DPT) had “temporarily” imposed a ban on vehicle imports mid last year.

The blanket ban on car imports has not only led to retrenchment of employees in many business entities and shutdown of shop in some cases. It has also indirectly given birth to a lucrative second hand car business.

However, the government order stated that, while import of electric vehicles would be allowed for all, import of utility vehicles will only be for farmers, rural businesses, farmers’ groups and cooperatives, based on certain conditions.

For rural businesses, the firms should be located outside the four thromdes and dzongkhag throms (urban areas) and should posses a micro-trade registration certificate, business license for at least five years, and produce tax clearance certificate from the revenue and customs department.

Those trade license holders, classified as “service”, however, will not be eligible for activities like construction and consultancy, hiring, travel and ticketing agents, and transport of goods and passengers. Farmers groups and cooperatives are those registered with agriculture ministry and operating outside the urban areas.

The government order stated that a ‘farmer’ refers to the “head of a household, primarily engaged in agricultural activities domiciled outside the thromdes and dzongkhag throms” and that “utility vehicle shall refer to only four-wheel pickups like Mahindra (Bolero), Tata (Xenon), etc.”

Electric vehicle would also refer to “an electric drive vehicle, which uses one or more electric motors or traction motors for propulsion and not hybrid electric vehicle (HEV) or plug-in electric vehicle (PEV)”. The cost of a utility vehicle should not exceed Nu 0.8mn and buyers should be liable to pay “applicable taxes and duties on the import”.

The order stated that such considerations were made as an “interim measure to promote use of electric vehicles in the country and also to promote rural development.”