eMobility Outlook 2024: UAE Edition

Electric vehicles offer a compelling solution to reduce the UAE’s carbon footprint and improve the air quality due to their zero-emission nature. However, there are challenges that hinder their widespread adoption, such as limited availability of models. The challenge for policymakers is one of encouraging reputable manufacturers to bring more models to the market, and to address initial purchase cost barriers. It is also important to assuage ‘range anxiety’ among buyers concerned that they will not be able to fuel their vehicles in a way that matches ICE vehicles. 

The UAE market primarily relies on imported BEV models, predominantly sourced from Europe and the US, often falling within higher price brackets. To attract Original Equipment Manufacturers (OEMs) to the UAE market, collaboration among various industry stakeholders is crucial. This involves:

• Tailored financial support: The government can offer tailored financial support packages to meet the specific requirements of manufacturing projects. These packages may include tax incentives, land grants, infrastructure development aid, and workforce training programmes.
• Local manufacturing and assembly: Establishment of local manufacturing and assembly plants for EVs can help lower costs and increase affordability for consumers. Early-stage manufacturing investments are already underway in the UAE. In Abu Dhabi green mobility technology developer NWTN has announced plans for an EV assembly plant in collaboration with logistics operator AD Ports, while Dutch solar EV developer Lightyear is developing solar powered vehicle concepts in the Sharjah Research, Technology and Innovation Park. In Sharjah, established waste recycling specialist Beeah Recycling has signed an agreement with the UAE Ministry of Energy and Infrastructure and the American University of Sharjah to create the UAE’s first recycling plant for end-of-life EV batteries.¹¹
• Engagement with local stakeholders: Collaboration with local industry associations, universities, and suppliers can help with leveraging their expertise and resources to create a supportive ecosystem for OEMs entering the market.
• Focus on all-income consumer segments: Existing mass market players like BYD and premium auto manufacturers, such as Polestar, should focus on addressing all-income consumer segments to broaden the EV market. 
• Establishment of R&D Centres: Setting up Research and Development (R&D) centers dedicated to advancing EV technologies, improving manufacturing processes, and advancing the skills of the local workforce through training programmes and apprenticeships can drive innovation and competitiveness in the EV sector.

China’s rapid advancement in the EV sector is a combination of a massive industrial policy effort. Large subsidies for innovation and research, an open-door policy welcoming foreign industry leaders, funding for production facilities, favourable loan terms to domestic manufacturers and subsidies for consumers have enabled companies, such as BYD and Tesla to invest in state-of-the-art production facilities, R&D initiatives, and supply chain optimisation. This has resulted in a rapid scale-up of EV production, with China now producing 54% total EVs globally and an even higher share for EV batteries.

A robust charging infrastructure is necessary to meet local demand for EV sales, as the region transitions towards a net zero economy. Identifying strategic locations for setting up public chargers could be done through an AI-based operational expansion roadmap, using big data analysis on demographics, population density, parking spaces, traffic flows, and purchasing power datasets. 

Encouraging faster growth in EV charging infrastructure requires a combination of public-private partnerships and direct investments. Collaborations among charging point operators (CPOs), utilities, eMobility service providers, and public entities is essential to ramp up charging infrastructure sustainably in the region.

Drawing lessons from successful EV charging infrastructure deployments in countries like China and Norway, there are some clear observations:

• Expansion of public charging infrastructure should be prioritised in less populated and rural areas to help address concerns on range anxiety and enhance the appeal of EV adoption outside urban regions.
  Implementing destination charging at locations where EV owners spend extended periods, such as supermarkets, shopping malls, public parking lots or restaurants and cafes.
  
• Regulatory support from responsible ministries is crucial for enforcing uniform charging standards, mandating charging infrastructure inclusion in new construction projects, commercial buildings, parking lots, restaurants, and highways.
• Regulating the deployment of faster and cheaper EV charging stations with the aim of decreasing charging times will enable maintaining efficiency and competitive pricing.
• Providing incentives and subsidies to businesses and municipalities, such as tax breaks, grants, and low-interest loans, can offset installation costs and accelerate the rollout of public charging infrastructure.

Internationally, European countries are comparable to the US and Canada in EV-to-public charge point ratios, with approximately 13 and 17 EVs per public charge point, respectively. However, the infrastructure in both Europe and North America is way behind China, which has approximately six EVs per public charge point.

Economic conditions within a region can influence attitudes towards EVs. Initial purchase price of electric cars in the UAE is relatively high due to factors, such as expensive insurance, higher battery and charging equipment costs and increased maintenance expenses due to lack of trained professionals. 

A recent survey and academic analysis published in the journal Sustainability¹² by researchers from the UAE University and the National High School of Engineering in Tunisia found that cost is the main driver of EV purchase decisions for UAE consumers, but that there were sharp differences in the propensity to buy EVs based on geographic location.

The survey found that consumers across all income levels are attracted by the potential of EVs to save fuel costs, but interest in saving money on car maintenance and the initial cost of purchase was stronger for consumers at higher income levels. Preferences for EVs were stronger in Dubai and Abu Dhabi, but weaker in areas with lower populations, such as Ras Al Khaimah and Umm al Quwain, suggesting that policy support will be vital to promote EV adoption in more rural areas.

The availability of more affordable EVs can broaden the appeal of eMobility across broader demographic groups, benefiting all income brackets and contributing to the UAE’s economy. To accelerate the transition towards electric mobility, there needs to be a collaboration among automakers, government, utilities, charging infrastructure providers, financial and research institutions, supply partners, and consumers.

Lowering the costs of EVs is key, and this can be achieved through:

• Government subsidies and incentives for consumers can help offset the higher upfront costs
• Adopting cost-saving measures including reduced shipping and import costs, shorter supply chains, and easier access to regional components and materials can make locally manufactured EVs more cost-competitive compared to imported models
• Offering favorable financing options, such as leasing programmes and low-interest loans can further encourage consumers to make the switch.

Most the leading countries in terms of EV sales, such as those in Europe, the USA, and China, offer significant monetary incentives that lower the upfront cost and attract consumers to switch to EVs.

Having battery electric vehicles (BEV) with increased range and charging capacity is crucial, especially for consumers who rely on their vehicles for long-distance travel or have limited access to charging infrastructure. 

Also, in the Middle East, countries like UAE, can have extreme temperatures. This poses a challenge for BEVs which may struggle to maintain optimal performance in summer. Maintaining the battery temperature within the optimal range of 20 to 35°C is crucial for ensuring efficient operation. This can be achieved through a battery management system equipped with a thermal system, which regulates the temperature during driving and charging. 

Additionally, excessive temperatures may require adjustments in charging power to prevent battery damage. EV manufacturers need to tailor vehicle components to withstand and thrive in such conditions, particularly optimising battery cooling systems to combat the heat and ensure consistent performance and prolong battery lifespan.

Owners should also be mindful of temperature conditions to optimise their vehicle's performance and longevity. Following guidelines for charging behaviour, such as using shaded charging points, can further mitigate temperature-related issues. 

As per our analysis, if the ambient temperature rises to 40°C, the total range of the vehicle decreases by almost 23%. Therefore, EV and battery manufacturers should address the range limitations issues in this region to attract more buyers and accelerate the transition to electric mobility. 

OEMS should focus on:

• Developing and implementing advanced battery thermal management systems to effectively regulate the temperature of the battery pack
• Utilising heat-resistant materials for the construction of battery enclosures, cooling systems that are vulnerable to heat exposure
• Collaborate with energy providers to develop innovative solutions for managing energy demand and optimising charging patterns in hot climates. This can include time-of-use charging programs, smart grid integration, and renewable energy integration to reduce environmental impact.
• Building batteries with higher capacities or other materials, such as as Li-Ion battery which are better for higher temperatures. This would enable users to benefit from higher charging capacities and greater ranges.

EVs are poised to play a crucial role in shaping a sustainable future. They aim to revolutionise not just transportation but also energy systems, becoming integral parts of our homes and ecosystems.

Smart energy management will optimise the charging infrastructure by efficiently delivering available power to EVs, and shifting charging loads across chargers and energy sources to safely deliver electricity without interfering with the power needs of buildings, homes, or other power consumers. 

Smart charging for electric vehicles is pivotal in unlocking synergies between the clean transport sector and low-carbon electricity.

• It minimises the load impact from EVs and unlocks the flexibility to use more solar and wind power and renewable energy generation mix. 
• It includes different pricing and technical charging options, including time-of-use pricing, which will encourage consumers to move their charging from peak to off-peak periods, and advanced smart charging approaches, such as direct control mechanisms. This will be necessary as a long-term solution at higher penetration levels and for the delivery of close-to-real-time balancing and ancillary services. 
• With bidirectional charging, EVs can become grid-connected storage units. This allows users to save money by charging during off-peak hours and earn money by selling stored energy during periods of oversupply.
• However, data privacy, data availability and data economy need to be ensured for all business models, for which, it is crucial that relevant standards for communication between all entities are in place along with technical and regulatory guidelines in order to guarantee the processing of the entire chain from load control to billing.

• As sustainability becomes a core value in the UAE, driving an electric vehicle will serve a tangible way for individuals to contribute to the larger narrative of responsible living and environmental stewardship. Potential EV buyers today anticipate a seamless and user-friendly experience every step of the way.
• A major hurdle in the adoption and optimisation of EVs is the transfer of knowledge from the dealer to the consumer. To address this, sales and service staff need to be well trained to stay abreast on the basics of EV terminology, EV charging levels, how to charge an electric car, how far a vehicle can travel before charging, what effect cold weather has on a battery, what the resale value may be and everything else a customer may want to know prior to making a purchase. Advanced battery technologies and smart charging systems, integrated with AI and connectivity features, enhance the driving experience, aligning EVs with the region's futuristic vision.
• Integrating electric buses into the public transportation system supports broader urban sustainability goals, such as reducing carbon emissions and improving air quality. This move offers convenient and cost-effective options for residents reliant on public transit, while also lowering operational costs in the long term.
• Lastly, OEMs should employ innovative digital campaigns to educate and reach prospective EV customers, particularly in less populated areas where misconceptions about EV suitability may exist for longer journeys.