BNDES lends R$500 million to Volkswagen to develop hybrid and electric cars

The National Bank for Economic and Social Development (BNDES) approved financing worth R$500 million for Volkswagen do Brasil to develop hybrid, flex and electric cars in the country in the coming years.

The loan will be made through the BNDES Mais Inovação program. The “financial cost”, according to the bank, will be equivalent to the Reference Rate (TR) – which in January was approximately 1.6% year on year. In the program, companies pay, in addition to the TR, the BNDES remuneration, which in most cases is 2.2% per year. The bank, however, did not say what its remuneration will be in the specific case of Volkswagen.

According to BNDES, the money will be used in research and development for a flex engine, hybrid transmission, high voltage system and studies of 100% electric vehicles, as well as for analyzing the impacts of electric and hybrid vehicles on the environment and flex, using ethanol.

According to the bank’s announcement, the loan is aligned with the Nova Indústria Brasil program, which aims to promote the development of sustainable mobility systems and give protagonism to Brazilian companies.

Part of the amount will also be allocated to modernizing Volkswagen’s four factories in Brazil.

“The objective of this project is to develop new technologies that contribute to decarbonization and the reduction of CO2 pollutant emissions from the national fleet, in line with sustainability”, said the president of BNDES, Aloizio Mercadante.

Last week, Volkswagen announced a plan to launch 16 vehicles by 2028, including hybrid, flex and fully electric models.

To this end, the German company added R$9 billion to its investment program, which reached R$16 billion – more than double the initial plan of R$7 billion. The company extended Collective Agreements with the unions at the four factories until 2028.

Of the new models, the company only says that the engine factory in São Carlos (SP) will produce an engine that is “even more innovative and efficient for hybrid vehicles”.

In the other plants, Volkswagen does not specify which will manufacture flex or electric models. The company only informs that two new models will be produced at the Anchieta factory, in São Bernardo do Campo (SP), and a new pickup truck in São José dos Pinhais (PR). The Taubaté (SP) unit will have an unprecedented model, 100% developed in Brazil.

According to the newspaper “O Estado de S. Paulo”, hybrid cars will be exported to South America. Electric cars will only be produced from the end of the decade. “They are still very expensive, they need a strong chain of battery and motor suppliers and extensive recharging infrastructure,” said Ciro Possobom, CEO of Volkswagen do Brasil to the newspaper.

President Luiz Inácio Lula da Silva (PT) participated in the event in which Volkswagen announced its plans, in São Bernardo do Campo, the city that is its political birthplace. He got into an open car saluting the workers, alongside his deputy, Geraldo Alckmin (PSB).

Lula stated that the automobile sector will invest R$41 billion in Brazil. Among electric vehicles, in addition to Volks, the Chinese BYD is building a factory in Bahia and GWM has plans to soon start operating in the country as well.

The electrification of cars in the country is still challenging for reasons such as the lack of logistics for disposing of batteries and charging infrastructure. There are still not enough gas stations to meet current demand. Today there are around 3,800 charging stations in Brazilian territory.

The government has been encouraging with financing, as is the case of BNDES with Volks, and through tax incentives, such as BYD, with the Lula Amendment, which grants benefits to automakers that set up shop in the Northeast, North and Center-West regions. .

Companies also place their bets. BYD has partnered to build 600 charging points and intends to buy a lithium mine, the main raw material for batteries. In addition to Brazil, these companies envision the potential Latin American market.