BARRIERS OPPORTUNITIES
Decline in the number of daily passengers, of public transportation due to the COVID-19 pandemic
Postponement of investments in e-buses Financial fragility of private operators
which went through processes of operational restructuring and cost reduction
Price fluctuation due to exchange rate imbalance Economic and financial imbalances of city halls Public transportation users switching
to individual cars
Process of stigmatizing public transportation as a locus for contamination of COVID-19 Outdated business model when compared to
current technologies and models
An appropriate time for discussing new business models and new fare systems Operational restructuring of
public transportation companies
Changes in visible air pollution and air quality in large urban centers during the pandemic The pandemic reinforced public awareness of the importance and the need to prioritize public transportation
COVID-19 imposed the use of management tools that will bring a positive legacy on indicators and quality assessment of the service provided Table 11. Barriers and opportunities for electric public transportation growth brought by COVID-19
Source: Personal collection.
4.2
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According to those interviews, ridership was down 70%, resulting in a 30% to 40% retraction in reve- nues obtained by daily fare, on average, in Brazil- ian cities.
In fact, during the studied period, some people changed their habits, including those regarding the way they commute. For instance, in Brazil, ap- proximately 77% of employees of small and me- dium-sized companies started to work remotely, from home. Another change was that people had to abide by social distancing guidelines, which means that people could no longer come into close con- tact with each other, a measure intended to pre- vent the spread of the virus COVID-19. Those are antagonistic elements to public transportation use, which, in its operational essence, involves groups of people travelling inside a shared mode of trans- portation and whose purpose is to take people to their respective workplaces, predominantly.
There is another element to aggravate the scenario:
an increase of operating expenses for public trans- portation operators, who had to follow cleaning and disinfecting procedures of buses because of the pandemic.
This set of aspects clearly also affected investments and actions that were expected to happen, in this case, to e- mobility. According to the interviews carried out, companies and investors saved their resources and investments – some of which were destined to the acquisition of new propulsion tech- nologies for public transportation – since the drive in such a scenario is to work towards better circum- stances in view of the financial difficulties imposed by COVID-19. Still based on the interviews, actions by the public transportation sector were, in fact, direct- ed to the maintenance of its operational survival.
In this sense, we can see clear actions of compa- nies in this sector on their own internal reorgani- zation by reducing their operating expenses; when
it comes to making investments, it is a component not yet to be explored or developed hereby.
In view of the severe effect on the public transpor- tation system, in these interviews we found that ac- quisition processes of e-buses for the year 2020 were suspended by some operators, without any concrete prospect for their resumption.
In addition to the losses suffered by operators them- selves, cities where these technologies were used have also shown interest in postponing agreements and resolutions for EV fleet transition and use of new propulsion systems, especially cities that had signed commitments to this scope. São Paulo is an example in this regard. The city declared a tempo- rary postponement of the obligations imposed by the Municipal Policy on Climate
Change of São Paulo (Law n. 14,933/2009), which has a direct effect on the transition to low-emission buses, including electric ones.
In addition, e-buses became more expensive in this period, which resulted in a barrier with higher acqui- sition costs. Considering that most EV components are not manufactured locally, for example, batteries (being the most critical component, in this sense), so it is necessary to import said components and even entire vehicles all together. In this sense, in the pan- demic, according to Infomoney, the depreciation of the Brazilian real against the US dollar was 35.6% as compared to the cumulative revenues of June 2020.
In summary, said depreciation directly affected the prices of imported goods. Such new values put in- vestments in e-buses even more in check.
Similarly, this scenario of COVID-19 also had an impact on the plans of new market entrants, com- panies that supply vehicles and components, which will reevaluate their business expansion plans in the Brazilian market.
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Another barrier identified as a consequence of COVID-19 is the broad understanding of pub- lic transportation as one of the main transmission routes of the virus. This process of stigmatizing public transportation as a locus for contamination has influenced users to seek other forms of mobility, such as individual cars or micro-mobility vehicles.
In short, the set of elements presented previous- ly – drop in demand due to COVID-19, financial fragility of private operators, public policies being paralyzed, postponed or suspended, systems based on daily fare collection suffering losses and curren- cy volatility challenges to acquisition of imported
goods – create, as a whole, a great pressure for the introduction of e-buses to be stopped, rethought and invariably postponed.
However, this scenario of extreme uncertainty and challenges have a certain duality, as opportunities revealed are precisely resultant of the pandemic.
The next section will present how to explore this other side to electric public transportation.
4.2.2. Opportunities
When we think of all the difficulties previously stud- ied, still, we spot some positive factors within this perspective of COVID-19, which can be seen as op- portunities for electric public transportation.
According to experts’ viewpoints, this moment of crisis in public transportation also revealed a crisis in the current business model in which this segment is shaped. In this case, it refers to the current model in which operation is linked to ownership.
The dramatic drop in public transit usage during COVID-19 can be interpreted as an appropriate time for this system and its operation to be re- thought and alternatives discussed. An example given by the experts interviewed during the devel- opment of this publication refers to a new procure- ment approach that separates bus ownership from operation and maintenance.
In the current model, the transport operator holds all ownership of assets, including their associated oper- ating expenses; therefore, one option is to share those responsibilities with other actors. For example, the Chilean model allows the entry of players from the electric power sector as participants in this model, whereas new players in the former are owners of assets (e-buses). In short, this ecosystem can be more sophis- ticated if we consider contemporary business models.
To learn more, we suggest the
publication “Electromobility in Public
Transportation: the case of the
city of São Paulo” , carried out by
WRI Brazil in partnership with Unicamp.
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By taking into account a possible reformulation of the procurement approach, we can see greater in- vestment attractiveness for this segment in the na- tional scenario. And this greater attractiveness has the power to leverage other companies and get new players into this ecosystem, which will then result in new products and services to be offered.
Another extremely notorious aspect that was men- tioned in the interviews was the role of vehicles in air pollutant emissions in cities. During the pan- demic, air pollution averages were well below those observed routinely and it was possible to notice changes in visible air pollution and air quality in large urban centers. COVID-19 made the problem of air pollution explicit and EVs came as a real alterna- tive to pollution mitigation measures. In a way, this contrast exposes the possibility of mobilizing public managers towards the e-mobility cause.
Finally, the pandemic reinforced public awareness of the importance and the need to prioritize public transportation, being considered an essential ser- vice in this context. This statement has been sup- ported by several specialist institutions in the urban mobility sector.
“Transportation is a social right to Brazilians provided by the constitution, so it is up to governments, during social isolation, to guarantee its functioning for both those who work to overcome the health crisis and those who work in essential services for the population.”
(WRI, 2020, p.1)