Environmental problems relating to air pollution and greenhouse gas (GHG) emissions from combustion of fossil fuels have prompted different countries and regions to find more sustainable modes of transportation. Electric vehicles (EVs) have emerged as highly promising technology that are expected to play a major role in energy transition towards a sustainable transport system in the next decades. In 2018, over two million EVs were sold worldwide and this number is expected to rise to 56 million by 2040 [1
]. With this trend, EVs are expected to significantly reduce GHG emissions, improve air quality, lessen dependence on fossil fuels, and enable the transition to renewable energy and sustainable transportation [2
]. In most developed countries, governments are giving financial incentives including subsidy schemes, purchase tax incentives, rebates and specific local extra-regulatory benefits for EVs owners; providing legal measures and privileges that support EVs; and developing public charging infrastructures to make the adoption of electric mobility more attractive [4
]. On the other hand, in developing countries, governments give modest incentives like import duty reductions and purchase subsidy; encourage shifting to non-motorized vehicles and biofuel blending for transportation and industrial uses; battery swapping and charging stations; and adaptation of EVs that suits the local settings such as electric scooters in India, electric “tuk-tuks” in Thailand and Kenya, and electric jeepney (e-jeepney) and electric tricycle (e-trike) in the Philippines [8
]. Despite its promise, investment in EVs in developing countries is challenged by high overnight cost, availability of charging infrastructure, policy support, and low public acceptance. These challenges give us the motivation to make a study that analyzes the adoption of EVs for public transportation focusing on developing countries.
Numerous works discuss the investment in EVs for public transportation from various perspective. The most common economic indicators include total cost of ownership (TCO), least cost, net present value (NPV), payback period (PBP), internal rate of return (IRR), and return on investment (ROI) [11
]. For instance, [12
] compared the TCO of battery EVs and internal combustion vehicles for local health authorities, municipalities, and special purpose authorities between passenger cars and mixed-use small light commercial vehicles. The research highlights economic sense to adopt EVs for a positive although relatively small percentage of the public sector fleet under the current price and cost structure. In another study, [13
] proposed a dynamic model based on the TCO from well to wheel, together with NPV, IRR, and PBP for the three groups of transportation, namely diesel, compressed natural gas, and electric buses in Turkey. The results identified that the electric bus concept with a charging station depot achieving sustainable and zero-emission goals drive the advancement of electric bus concept for Istanbul Public Transport. Further, [14
] analyzed the difference in costs of two types of buses serving urban public transportation systems in Latvia: diesel-fueled internal combustion engine bus and battery electric bus. The findings showed that initial investments of changing public transportation fleet to electric buses and the costs of battery replacement still outweigh the monetary advantages gained from lower operational costs and additional environmental benefits. Considering the market price uncertainty as a factor that affects investment, [15
] extended the TCO into a real option model to identify the optimal timing of adoption of EVs. The results found that even without subsidies, EVs are more cost-effective than internal combustion engine vehicles and as the fluctuation of fuel price becomes more stable, consumer preference to EV products increases. Another study used the real option model to analyze the adoption of EVs under uncertainty in fuel prices [10
]. Their results identified a more optimal decision to invest in EVs over diesel-fueled vehicle in the current business environment.
As public transportation is a “public good”, its evaluation from purely private cost basis will always be uneconomic. The social benefits arising from better public transport system such as GHG emissions reduction, social inclusion, development opportunities, and public acceptance should also be accounted for. Several studies integrate economic analysis with social and environmental impacts of the adoption of EVs for public transportation. For instance, [16
] evaluated an optimal bus fleet combination for different driving conditions that minimize life cycle cost, GHG emissions, and conventional air pollutant emission impacts. The research found that electric bus is the dominant vehicle type for heavily congested driving cycles, the hybrid bus has more balanced performances due to lower initial investment compared to electric buses, while petroleum buses have seldom been selected in the model. In another study, [17
] proposed a holistic, reliable, and transparent comparison of battery EVs and fuel cell EVs considering their environmental impacts (EI) and costs over their whole life cycle. Applying the life cycle assessment (LCA) and a life cycle costing, the findings show that battery EVs achieve lower environmental impact and TOC compared with fuel cell EVs. Considering the public acceptance, [18
] examined the prevailing obstacles for market diffusion which encumber the development of EV technology adoption. Their results demonstrate that EVs acceptance in the case of Malaysia can be explained as being significantly related to social influences, performance attributes, financial benefits, environmental concerns, demographics, infrastructure readiness, and government interventions.
This paper aims to contribute to the existing literature by proposing a more inclusive valuation framework for the adoption of EVs for public transport using the Philippines as a case study. The main objective of this research is to compare EVs and combustion vehicles for public transportation in terms of economic and environmental impacts as well as social acceptance. Economic indicators include the NPV, PBP, ROI, public utility vehicle (PUV) driver salary, and owner profit. Environmental impact analysis includes GHG emissions, electricity demand, fossil fuel demand, and air pollutants such as particulate matter (PM), nitrogen oxides (NOx), sulfur oxides (SOx), and carbon monoxide (CO) emissions. The social acceptance takes the perspective and outlook of various transportation stakeholders including PUV driver and passengers, other stakeholders (business owners, investors, gas/electricity distributors, PUV manufacturers), and experts (law, policy, governance, environment, labor, engineering, academe). This study finally aims to suggest government policies to support the adoption of EVs and to realize the government’s goal of a more sustainable public transport system.
3. Results and Discussion
and Table 3
summarize the results of financial analysis between c-PUV and e-PUV with different systems. The results show positive NPVs which indicate positive returns for all types of investment projects. Despite the high investment cost, results reveal the best investment opportunity for e-jeepney with up to USD 62,000 of NPV for 10 years of operation. In terms of ROI and PBP, results favor e-trike over other alternatives with an investment recoverable within 10 months of operation and returns of 11 to 12 times of the initial investment in 10 years of operation. Our results imply that e-jeepney is the best investment option if the investor can pay the huge initial cost of USD 25k-USD 30k per unit (USD 10k to USD 15k per unit for traditional jeepney), otherwise they should invest in e-trike at USD 3.5k-USD 9.5k per unit (USD 1.2k to USD 2k per unit traditional tricycle). From the perspective of drivers, transport operators and owners, e-PUVs yield higher take home pay compared with c-PUVs. The main reasons for these results include higher earnings from larger seating capacity of e-PUVs, more energy efficient EVs, and cost savings from using electricity. These support previous claims that investing in e-PUVs in the Philippines is more profitable than c-PUVs due to higher passenger capacity, lower fuel consumption, energy efficiency, and safer body design [10
We also found that from operators’ and investors’ point of view, the PUVMP system favors investment in e-PUVs with higher annual profits for owners, higher NPV, lower PBP, and higher ROI. For instance, despite the high investment cost, e-PUVs have higher NPV due to fuel cost savings and higher revenues from increased base fare. On the other hand, the PUVMP disfavors the drivers with lower take home pay. This is because with the current boundary system, the drivers work as many hours as they can, subtract the fuel costs from the daily earnings, pay the owner a fixed amount called “boundary”, and the remaining money is their take home pay or daily salary. Further, this system promotes on-street competition and disinclines drivers to comply with designated stops, which generates more revenue compared to a system operating on a reliable schedule, which promotes more public transport use [41
]. With this system, a driver can earn as much as USD 2500 for tricycle, USD 5470 for e-trike, USD 4670 for jeepney, and USD 6710 for e-jeepney per year. However, the drivers have no benefits other than daily take home pay. With the PUVMP, the drivers work for 8 h per day, receive a monthly salary, and enjoy regular employment benefits under the law including vacation and sickness leave, 13th month pay, optional Christmas bonus, health insurance, social security, and pension contribution. These benefits make the drivers still better off with PUVMP compared with the boundary system which the government aims to eliminate in the next few years.
3.1. Environmental Impact
The results of GHG estimations in Table 4
show a 75% decline in emissions for tricycles and 87% for jeepneys. These sum up to an 85% GHG emission reduction of the whole fleet, from 14.98–21.23 Mt CO2
eq/year to 2.23–3.13 Mt CO2
eq/year. The reduction in GHG emissions is due to higher energy efficiency of e-PUV and lower GHG emission factor of 0.56 kg CO2
eq/kWh electricity consumed compared to 2.7 kg CO2
eq/L fuel for combustion vehicles. This supports previous claims that EV has lower GHG emissions compared to internal combustion engines [42
]. It should be noted that emissions from e-PUV are still larger compared with the results from the literature and other countries. This is due to the energy generation mix in the Philippines being dominated by coal and natural gas, which have high GHG emissions [45
]. The findings highlight two important points: Adoption of EV does not guarantee zero net emissions but a significant emission reduction, and that emissions can further be reduced if the electricity used by e-PUV comes from renewable energy sources [43
In terms of energy demand, adoption of e-PUV will save up to 5.28–7.93 million barrels of gasoline per year and 8.81–12.33 million barrels of diesel per year for the PUV fleet. As the country is importing 52% of its 118.8 million barrels of gasoline demand and 65.3% of its 205.2 million barrels of diesel oil demand [46
], the estimated energy savings implies a reduction of imported gasoline to 37.42%, and 33.39% for diesel. On the other hand, adoption of e-PUV increases the electricity demand by 1950–2670 GWh per year. Currently the country has 6592 MW dependable generating capacity from renewable energy sources producing 23,326 GWh of electricity per year [31
]. With the PUVMP, adoption of e-PUV requires an additional 750 MW of dependable generating capacity from renewable energy sources. This demand implies huge investments in renewable energy infrastructures, which further supports the country’s goal of increasing its renewable energy capacity to 60% by 2030 [47
In terms of air pollutants, the adoption of e-PUV decreases the PM, NOx, SOx, and CO emissions by an average of 96%, 82%, 59%, and 93%, respectively. Our estimated results are relatively higher compared with previous studies [48
] as our case study analyzed the conventional public transport which are less energy efficient, dilapidated, and smoke-belchers. Hence, the adoption of e-PUV significantly reduces the air pollution and its associated health effects, particularly ischemic heart disease, stroke, lung cancer, chronic obstructive pulmonary disease, and acute lower respiratory infections [50
3.2. Social Acceptance and Outlook
The results from Figure 1
show that the respondents prefer e-PUV over c-PUV. This finding confirms a previous study that among neighboring Asian countries, the Philippines has the highest public perception, with 46% of Filipinos expressed interest in owning or driving an e-vehicle (e-jeepney or e-trike) while more commuters preferred to ride EVs than the conventional transportation in areas where EVs are available [51
]. Our results are slightly higher than previous study as the present government is eagerly pushing the full implementation of PUVMP, active discussion in various forms of media on pros and cons of EVs, and Filipinos’ environmental awareness is now increasing with the adoption of more sustainable modes of public transport [10
]. As shown in Figure 1
, most commuters, stakeholders, and experts favor e-PUV. On the other hand, PUV drivers favor conventional vehicles due to investment cost and technological issues as shown in Figure 2
The results in Figure 3
show that 38% of respondents think that electric public transportation will be fully implemented and that c-PUV be fully phased out in the country within 10 years; 20% answered within 20 years; and 15% within 30 years. On the other hand, 20% of the respondents are pessimistic, and believe that full transport electrification in the country is not totally possible.
We finally asked the respondents what other solutions and programs they could suggest for the government to adopt cleaner, environment-friendly, and more sustainable modes of transportation. Of the total respondents, 20% provided suggestions particularly on the implementation of government policies (58); various modes of transportation and infrastructure development (56); information dissemination and skills training (43); and technology innovation (26). The policy recommendations included tax incentives and purchase subsidy for adopters of EVs and strict implementation of the existing laws such as the Clean Air Act, no garage no car, old vehicle replacement, no car sharing, and the PUVMP.
Respondents also suggested other modes of transportation particularly with mass transportation. Currently, the country’s railway footprint is only 212.4 kilometers from four train lines in Metro Manila. Under the “Build, build, build” program, the current administration is now building five of nine additional railway projects across the country, including the first subway line in Metro Manila. Other modes of transportation suggested are walking bicycle and “kalesa”, an iconic two-wheeled vehicle drawn by a horse. These are also backed-up with suggestions on massive railway infrastructures, road widening projects, bike lanes, and pavements for pedestrians to encourage walking/cycling.
While EVs have been regarded as a promising solution to address the pressure to reduce GHG emissions in the transportation sector, gaining and processing EV-related information as the foundation for adoption have been ignored, hence, social media play a significant role in promoting information dissemination and innovation diffusion [52
]. Responses from the survey support this claim by expressing the importance of media on informing the public about the benefits of EVs and its relevance in energy transition and climate change. Responses also emphasize the need to update the skills of the drivers as well as to review the basic traffic rules and regulations. Further, the respondents were hoping that the government boost its programs on developing and manufacturing localized EV technologies, which will also benefit not only the transport sector but the economy as well.
Electric vehicles appear to be the future of public transportation, addressing global issues including greenhouse gas emissions, pollution, and energy sustainability. An increasing number of studies discuss investments in electric public transport ranging from economic points of view to technological and environmental perspectives. We contribute to the existing literature by offering a more inclusive approach to evaluate whether electric vehicles are better modes of transportation than combustion vehicles in the perspectives of stakeholders, experts, and the commuting public. Using the case of the Philippines, we applied various methodologies including economic analysis, environmental impact assessment, and social acceptance comparing electric and conventional public transport.
Our findings show a better opportunity for transport operators and investors to benefit from investing in electric tricycle and electric jeepneys. When the boundary system is abolished and the public utility vehicle modernization program is fully implemented, the drivers are worse off in terms of daily take home pay but better off from regular employment benefits. With public acceptance, our findings show that respondents prefer to ride or drive electric than combustion vehicle. The respondents are optimistic that electrification of public transport will be fully implemented in the next 10 years. Finally, the environmental impact analysis highlights the benefits of using electric vehicles in terms of significant reduction of air particulates and decreased dependence on imported fossil fuels. While electric vehicles are not totally zero emissions due to the current power generation mix, the significant decrease in greenhouse gas emissions from adopting electric public transport encourages the government to rely on more sustainable sources of energy.
Applying the proposed methodology to developed countries, we expect a highly favorable result towards the adoption of electric vehicles due to better government support, financing, maturity of technology, availability of charging infrastructures, stricter environmental policies, and public acceptance. On the other hand, relatively similar results are expected compared to other developing countries in transition to a more sustainable public transport system. In the Philippines, a total of 1403 units of electric tricycles and jeepneys are deployed over the country as of 2019 [53
]. This value is still far from the target number of units and the penetration rate of electric vehicles for public transportation as the adoption is challenged by the limited charging and road infrastructures, a lack of a developed supply chain for batteries and parts, uncertainty regarding standards and requirements, and ownership and usage control restrictions. To facilitate the adoption of electric vehicles, our results recommend the following government policies:
Stronger financing supporting mechanisms such as investment subsidy, tax benefit for using electric vehicle, and old vehicle scrapping scheme.
Establishing strategic areas for the adoption of electric public transport in short and flat routes in central business districts, using combustion vehicles with EURO-4 emission standards or better in routes where electric vehicles cannot initially be adopted.
Investing in public charging infrastructures optimally located in strategic places such as public terminals, parking areas, and gas stations.
Clearer and stricter implementation of government policies related to fleet consolidation and management, public utility vehicle operational age limit, emissions test, route rationalization, loading and unloading areas, traffic rules and regulations, and labor codes.
Upgrading the drivers’ and mechanics’ skills on operating electric vehicles and traffic rules.
Information dissemination on the benefits of using more sustainable modes of transportation and its relevance on energy transition and climate change.
Developing locally made electric vehicles to boost the economy, lower the investment costs, and create more jobs.
Promoting non-motorized mode of transportation such as cycling and walking by assigning pedestrian and bicycle lanes.
Intensifying the investment in mass transportation infrastructures such as light trains, trams, and subway trains.
Increasing the percentage of renewables in the power generation mix by investing in more sustainable sources of energy.
In this research, we focused our analyses on jeepneys and tricycles as these are the most common modes of public transportation in the case study. Future studies may also consider other land transportation modes such as public buses, scooters, cars, taxis, and trains, and water transportation such as water taxi, ferries, and cargo ships. These will be relevant particularly to archipelagic countries composed of islands that are not connected by bridges. In terms of sampling, this study used 1319 respondents from the survey which may still not be a representative of the whole population. For instance, there are 435,619 public utility vehicle drivers throughout the country [54
], but we only have 465 responses from the drivers. While our results conform with previous works on the social acceptance of electric vehicles for public transportation in the country, we set this as a limitation and propose to increase the number of respondents in future surveys to better represent the population. Another limitation is the static financial valuation which estimated the value of investments in public transport discounted at the present period. One of the concerns of drivers and investors included the timing of investment and adoption of electric vehicles. In this case, the real options approach is a more appropriate method which will give value on the flexibility in making investment decisions and identify the optimal timing of investment. Despite these limitations, we believe that this study could be a good benchmark for further analysis of the adoption of cleaner and more sustainable modes of public transportation.