Does the heightened interest in electrified vehicles reflect a more permanent shift?
IF THE LATEST car sales reports from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) are any indication, electrified vehicles (xEVs) are apparently the paramour of many a car buyer these days.
The conflict in the Middle East is on its 10th week or so, and we don’t know for how much longer. The Iran War — though officially in a ceasefire — continues; it seems to be less about what is happening than what is not. And what is not happening is ships getting through the Strait of Hormuz (alright, except maybe for the absolutely rare one or two vessels that have). The supply of oil is not normalizing. The United States and Iran are not in a face-to-face dialogue to end the conflict. There does not seem to be a clear regime with whom to negotiate an off-ramp to hostilities.
Thankfully, however, what is happening is that the bombing of Iran has ceased. Innocent Iranians are safe, for now. The humanitarian cost of the war is stopped.
The disruption of oil supply greatly impacts Asia more than the United States or Europe. Many Asian nations — of course, the Philippines included — get their oil through the Strait of Hormuz. For the USA and EU, their shipments go through the Red Sea to vital sea routes such as the Suez Canal or the Panama Canal and only minimally through Hormuz. In the case of the United States, too, most of its oil is supplied by pipelines from Canada in addition to what they produce domestically.
In a report by Zero Carbon Analytics in February, the US Energy Information Administration (EIA) estimated that 84% of oil and 83% of liquefied natural gas (LNG) shipped through the Strait of Hormuz in 2024 went to Asian markets. The report cited that “just four Asian countries — China, India, Japan and South Korea — accounted for 75% of oil and 59% of LNG flows through the chokepoint.”
On the other hand, according to the Department of Energy (DoE) in April, 98% of the crude oil imports of the Philippines come from the Middle East, primarily through the Strait of Hormuz. This leaves us highly vulnerable to disruptions in the region. As a result, pump prices of gasoline and diesel have risen to levels unseen before. Kerosene and LPG prices have also spiked to record highs. Thankfully, prices saw a fall a couple of weeks ago, but the continued standoff between the United States and Iran does not bode well for a sustained drop.
The very steep rise in fuel pump prices and not knowing when they will revert to pre-March levels (when the attacks on Iran started) is causing a lot of anxiety among consumers, especially motorists. Car buyers seem to have very abruptly trained their attention on xEVs of all kinds as the panacea to high fuel prices — whether they be hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), battery electric vehicles (BEVs), or every possible variant in between.
To be sure, xEVs were already gaining a growing following even before fuel prices started soaring. A definite interest among car buyers was growing, particularly among the more affluent segments of the market.
One accelerator of demand in more recent years is the reduced price points of xEVs, mainly resulting from tax subsidies from the government. Unfortunately, busting the myth that xEVs have achieved price parity with their internal combustion engine (ICE) counterparts might just be exaggerated, as yet. Without the subsidies, xEV prices would certainly be higher than they are today. But clearly, the aim of the government to make electrified vehicles a part of the consideration set of car buyers — by making them more affordable — is working.
The question is, how long can the government continue to provide these subsidies? China, the United States, Thailand, Malaysia, and Indonesia, among others, have already removed buyer incentives for xEVs, causing a drag in demand — pre-Iran war, that is. In the Philippines, the exemption of xEvs from import duties will expire at the end of 2028 with no assurance if it will be continued or not.
Another driver for the growing pre-war take-up in xEVs was the exemption from the Unified Vehicular Volume Reduction Program (UVVRP), or number-coding scheme. Car buyers saw this as a motivator to switch or add to the cars in their garage even if the exemption is not guaranteed to continue after 2028. The present value of the “free pass” apparently outweighs the chance of its revocation some two years from now.
On the supply side of the equation, auto manufacturers of the Sino persuasion came marching into the Philippine auto scene, toting their arsenal of electrified vehicle offerings with them. Post COVID-19, the entry of Chinese brands was relentless, driven by an urgent need to soak up excess production capacities in their factories back home. While this move may have also been encouraged by inroads they had made in our ASEAN neighbors like Thailand, Indonesia, and Malaysia, it was clear that the barriers to entry in the Philippines were much lower, thanks to our country’s more liberalized trade policy.
The stage was set for a climb in both supply and demand for xEVs. Then the war in Iran happened and interest “hyper-scaled.” As had happened when the exemption of xEVs from number-coding was announced, there was a dash to auto retailers carrying all sorts of electrified models. But the move was more apparent among multiple car owners and affluents.
The mainstream markets of first-time car buyers, single car owners, and business establishments were more guarded. They were concerned about the operability of plug-in or battery EVs and how these aligned with their mobility needs. Key among their concerns was range anxiety and the ease of charging their vehicles — especially for public service vehicles (e.g. ambulances, police cars, military patrol vehicles, fire trucks) or those for doctor’s calls, medical emergencies, media use or the like. These vehicles must be on standby 24/7 and ready to go at a moment’s notice.
The rise in fuel prices because of the Iran War will not address range concerns but it opens another point of consideration: Will it result to significant savings in running costs? Offhand, the gains might seem compelling, more so when charging at home than at commercial charging stations.
Let us do some math. According to a recent report by Top Gear Philippines last April, home charging is about P15.55/kWh while commercial charging costs between P22 to P28.50/kWh (i.e. an average of P25.25/kWh). At an assumed mileage of 7km/kWh, that translates to P2.22/km and P3.60/km, respectively. A compact ICE model would go about 10 to 12 kilometers per liter of gas. At the current price of about P90/liter, that results to a cost of P8.20/km. If you charge commercially, you save about P4.60/liter or P1,840 if you travel an average of 400 kilometers per month. I suppose you weigh that near-term benefit against the range anxiety and ease of charging concerns that it carries. Also, we need to consider that fuel prices may normalize after the Iran conflict is over and the expected “savings” will not be as big as they are today.
Hybrid electric vehicles, on the other hand, offer improved fuel efficiency over their equivalent ICE models. A study by the Australian Automotive Association in 2025 showed that mileage for the Toyota RAV4, Corolla, and Camry were better by 29.4%, 32.3% and 32.4%, respectively, on combined urban, rural, and highway running modes. Since HEVs are self-charging, concerns for range anxiety or charging ease are not an issue.
Buying a car is a big investment. Choosing one has immediate and long-term implications. Therefore, we need to make a considered and deliberate choice that will best serve our mobility needs over the intended period of our ownership. Clearly, electrified vehicles are the way forward. It is a sustainable mobility solution, and it offers potentially lower running and maintenance costs. It is fortunate that demand for xEVs has received a second wind — albeit from an unfortunate breakout of hostilities in the Middle East region — after sales growth seems to have plateaued in major car markets, China and the United States included.
Choosing the drivetrain that best suits your needs should not solely be about being able to save on fuel costs. Short-term palliatives might come back to bite us later. Other considerations would include whether or not you have easy access to a charging point or station — hopefully at home so it is cheaper, though it will take longer. Do you travel long or unplanned distances as a matter of course? If you do, you may suddenly find yourself in a bind when you must go further than your remaining battery charge allows. Is this your first car or do you already have another car in your garage? What does it run on? In case of an emergency, it will be good to have a backup if you were unable to recharge. Is this vehicle a tool of your trade or an essential part of your livelihood? Charging can lead to downtime or lost opportunities when your car is plugged in. Hopefully, your answers will all lead you to choosing an xEV. But, if using an ICE model still better suits your circumstances, then there are a host of economical choices to pick from, too. There really is no one-size-fits-all solution.
And, by the way, the choice of xEVs because of its benefits in the fight for carbon neutrality is actually at the crux of the transition to electrified mobility. At the moment, however, energy security seems to be hogging the headlines.
So, will this infatuation with xEVs lead to a tentative “live-in” arrangement to see how things work out, or a drive up to a hallowed (i.e., more permanent) spot in your garage for a happily ever after? Ultimately, it is about what works better for you.
