BUSINESS EVOLUTION

Compiled by Yamini Sequeira

MOULDING AN ELECTRIC FUTURE

Dr. Kalinga Kaluperuma urges stronger regulations for eco-friendly vehicles

Sri Lanka’s motor industry has faced myriad challenges, most notably stemming from the vehicle import suspension imposed in March 2020, with the repercussions being felt across related sectors such as leasing, insurance and lubricants.

The loss of over 15,000 direct and indirect jobs across vehicle franchise holders and their dealer networks have compounded these woes.

In recent times, the situation has become increasingly complex: inflation and the depreciation of the Sri Lankan Rupee contributed to rising costs, for both consumers and businesses. As a result, many potential buyers found themselves priced out of the market, leading to a noticeable decline in vehicle upgrades.

Meanwhile, the used vehicle market witnessed prices more than double since 2019, making it increasingly difficult for individuals to afford personal transportation.

Compounding these issues is the lack of proper regulation whereby individuals import and sell vehicles without making the requisite contributions to the local economy, including job creation and infrastructure development.

This gap enables unethical traders to exploit the system for personal gain, undermining the integrity of the automotive market.

LOOKING BEYOND Dr. Kalinga Kaluperuma says: “Despite these challenges, the future of the automotive industry is being reshaped by advancements in new energy vehicles including electric and hydrogen powered options.”

“Countries with established renewable energy sources and supportive infrastructure have made significant progress in this area. However, Sri Lanka still lags in critical aspects needed for large-scale electric vehicle (EV) adoption,” he laments.

The country lacks comprehensive regulations, adequate charging stations and effective battery recycling processes. However, Kaluperuma believes that the state is beginning to recognise the need for regulatory frameworks that support the EV market’s growth.

“Yet, until proper guidelines are established, manufacturers and consumers face uncertainty regarding the future of electric mobility. Furthermore, public awareness and education – regarding EV benefits and functionalities – are essential to fostering acceptance among consumers,” he adds.

Kaluperuma stresses that “government policies and regulations will play a pivotal role in fostering sustainable growth. Effective policy frameworks should ensure that the adoption of new technologies is accompanied by consumer, economic and environmental protections.”

“Policy-making must establish standards that prevent rogue traders from exploiting loopholes, thus maintaining market integrity,” he asserts.

COMPLIANCE IS KEY Kaluperuma explains: “Automobile manufacturers are actively preparing for the anticipated tightening of environmental regulations and emission standards. Local subsidiaries of international firms remain vigilant about upcoming regulatory shifts, provided that these changes are communicated with sufficient lead times.”

In parallel, there is growing recognition among manufacturers of the importance of sustainable production practices.

Kaluperuma points out that as environmental awareness grows, consumers and regulatory bodies are calling for cleaner techno­logies and manufacturing processes. For instance, some manufacturers are investing in hybrid and fully electric models, aligning product offerings with global trends.

“The pandemic exposed vulnerabilities in global supply chains, highlighted by the semiconductor chip shortage that has seriously impacted the motor industry. Vehicles require numerous chips for various functions, from safety features to infotainment systems,” he explains.

And he continues: “This supply crisis has underscored the need for manufacturers to diversify their sourcing strategies, reducing dependence on single regions for critical components.”

China previously dominated the high-voltage battery manufacturing sector for EVs, and is now facing competition from emerging players in the US and India. These new entrants are diversifying the supply chain and providing opportunities for collaboration on technologies that are critical for the future of electric vehicles.

SUSTAINABLE DESIGNS Kaluperuma ex­plains that “the push towards sustainable and eco-friendly vehicle designs is prima­rily driven by climate change concerns with tailpipe emissions considered a significant contributor to global warming.”

“Initiatives such as the Sustainable Development Goals (SDGs) and COP agreements have prompted many governments to commit to reducing emissions,” he observes.

Kaluperuma continues: “In developed countries, consumer demand for fuel efficient vehicles is a major factor driving this shift. This is evident in the growing trend of hybrid and electric vehicle offerings in the global market.”

“In developing nations like Sri Lanka however, regulatory requirements often serve as the primary motivator for manufacturers and agents to offer environmentally-friendly products,” he notes.

Kaluperuma elaborates that consumer preferences are evolving with increasing demand for connected and smart vehicles, encapsulated in the CASE (Connected, Automated, Shared and Electric) framework.

However, he adds that “the adoption of such vehicles in Sri Lanka will heavily depend on the economy, infrastructure and legal framework. As consumers become more inclined towards shared mobility solutions, the traditional model of vehicle ownership may decline, impacting auto dealers and manufacturers.”

Kaluperuma elaborates: “The widespread adoption of electric vehicles could have profound economic implications for the automotive supply chain and related industries. Unlike traditional internal-combustion engine vehicles, EVs have fewer mo­ving parts, resulting in lower repair and maintenance needs.”

He believes this shift could “negatively impact thousands of small and medium-size workshops that traditionally rely on vehicle repairs for their livelihood.”

“To mitigate this, it’s essential to develop training programmes for workshops to equip them with the skills needed to service EVs. Authorised service centres will dominate the market but supporting authorised workshops can help ensure that they remain viable in the changing landscape,” he insists.

Addressing the environmental impacts of electric vehicle batteries is another crucial aspect that must be managed as the market evolves. He explains that high-voltage batteries – primarily lithium-ion – are integral to EV performance, yet present disposal challenges at the end of their useful life.

“Recycling and repurposing these batte­ries are essential to minimise environmental harm. Franchise holders importing EVs often face stringent requirements regarding battery disposal,” Kaluperuma notes.

He adds: “However, grey importers may not adhere to such standards, prompting the Central Environmental Authority (CEA) to develop regulations governing EV battery imports and disposal.”

PARTNER FOR PROGRESS To advance innovation and address industry-wide challenges, collaborative efforts are essential, he opines: “Fostering partnerships between local manufacturers, government entities and educational institutions can stimulate innovation and help the industry adapt to evolving global trends.”

As Sri Lanka’s motor industry navigates these complexities, there is hope for a brighter future. Stakeholders are calling for favourable policies that prioritise regulatory frameworks in the upcoming budget, ensuring economic contributions from all

importers and traders.

Resuming vehicle imports in a sustainable manner is paramount, enabling the industry to recover while maintaining economic stability.