Economy, Business And Markets

Trying to Define Hybrids

Trying to Define Hybrids Trying to Define Hybrids

In May of this year the government announced that it had eliminated import tariffs on electric and hybrid cars with engines of 2500cc and smaller. This surprise move shocked both local and foreign car fanatics, with some even commenting on how an “Oil producing country would even be interested in electrics and hybrids.”  

This is the first time Iran has dropped import tariffs on electric and hybrid class cars, the Mehr news agency quoted Iranian Deputy Industry, Mine, and Trade Minister Valiollah Afkhamirad as saying, back in May.

The astounding move which is still unknown to most is to “to boost domestic production and make the auto industry competitive” again. The administration of former president Mahmoud Ahmadinejad increased car import duties to as much as 90 percent during his tenure.

This resulted in, various people believe, a deterioration of quality of the locally produced cars and allowed three major car manufacturers to form an effective oligopoly between them.

Soon after eliminating the tariffs on the electric and hybrid cars, the managing director of the Iran Power Generation Transmission & Distribution Management company (Tavanir), Homayoun Haeri, said a car had been imported into the country by way of Paris, reported autoblogreen.

The company at the time didn’t disclose the name of the vehicle, but some sources suggested that it could have been a Mitsubishi i-Miev or its French partner’s –PSA Pegueot Citroen -  iOn.

The car reportedly has about 100 km range after a full charge and is able to connect to the mains electricity over night for a normal charge.

“Once fully charged, the electric car is able to travel 100 km,” Haeri said, adding that the charging process will take 4.5-5 hours. “Fully charging the car will cost only 4,000 rials (12 cents at market exchange rate).”

 Paradigm Shift

The first electric car marks a milestone in the long standing development of the Iranian auto sector. However it is neither impressive, nor historic, as the car wasn’t produced in Iran, and the fact that it had to come from France, is another sign of the overbearing influence of French companies in the Iranian auto sector.

When talking to an academic from the city of Qom, located near Tehran, about the issue of importing electric and hybrid cars, he said, “There seems to be a disconnect between top level government policy and the day-to-day workings of the customs administration.”

“In calls to different experts on the issue, there seems to be a lack of connectivity between the policy implementation and when it should go live to the public arena,” he added.

It’s a well known fact that Iran’s auto industry needs billions of dollars of foreign direct investment (FDI), but what is not known is the actual demand for electric cars in a country where fuel is still cheap by international standards.

 Definition of Hybrid

Edmonds Motoring Magazine describes hybrids as a vehicle that utilizes more than one form of onboard energy to achieve propulsion. In practice, that means a hybrid will have a traditional internal-combustion engine and a fuel tank, as well as one or more electric motors and a battery pack.

Hybrid cars are sometimes mistakenly confused with electric vehicles. Hybrids are most often gasoline-burning machines that utilize their electric bits to collect and reuse energy that normally goes to waste in standard cars.

Theoretically, diesel-electric hybrids would be even more fuel-efficient, but hybrid systems and diesel engines both represent extra cost. So far, installing both in the same vehicle has proven to be prohibitively expensive.

When contacting the customs administration for their definition of a hybrid car, they responded, “We are currently in ongoing meetings to define exactly what we think a hybrid car is.”

This statement is interesting, as it suggests that cars that are run on CNG may also be reclassified as “hybrid”.

 Government Push

The government in recent years has tried to push the concept of green vehicles from both importation and through its own oligopoly of companies, much like European countries, Iran’s cities have become blighted by cheap cars and motorcycles which through years of neglect and overuse have become heavier polluters than say in a similar country like Turkey.

One of the main issues in the auto market is retention of vehicles, meaning because of the lack of new cars coming into the market, the older cars remain on the roads for longer periods than most would prefer.

The government for their part has begun procedures to counter the effects of pollution through measures enacted by the country’s municipalities.

The capital has started procedures like “odd and even days,” the rule of whether a car as an odd or even number plate will be allowed to drive in the city center, and also the new congestion charge zone which encompasses great swathes of the city, meaning automatic fines via electronic monitoring camera systems.

 People’s Response

With duties on hybrids and electric cars relaxed, one wouldn’t be wrong to think that the population would jump on this opportunity with regards to cheap car imports. Unfortunately the distance between government policy and the import of hybrids, EV’s still remains large. Firstly car dealers in the capital continue to ignore this segment of the car import market, due to the mark-up on the cars being not as great as say a Range Rover or Mercedes-Benz, secondly, if people hear about the limited range and style of the car they are often put off by the limitations.


BMW recently launched the i8, its first hybrid supercar; the first of its kind of the long established German based company. Featuring swan-wing doors, a shark-nose front end, and a supercar stance, the i8 plug-in hybrid is BMW’s most revolutionary car in decades.

A turbocharged three-cylinder engine/electric motor duo with a combined 357 hp delivers M3-like acceleration, a 249 km/h top speed.

What needs to be noted is that the entry level car if imported under the tax free status would come in at a staggeringly low price of $135,000 (4.3 billion rials at market exchange rate), that would come the same as the United States’ price.

This would bring the BMW i8 at around the same price range as Hyundai’s Centennial which is liable for the full 100 percent import tax due to not being a hybrid.

If that price is too high then there is the competitively priced Renault Zoe which comes in at $27,000 (860 million rials at market exchange rate).  

This is basically a better-designed and smaller Fluence which hit the Iranian market a few months ago. It is also based on the Alliance B platform which includes the recently announced Renault Clio4 which starts production soon in Iran.

The 22KWh NEC lithium-ion battery sits under the floor and powers a 65kW AC electric motor, which drives the front wheels. Range is quoted at 210km in the NEDC Combined cycle. Top speed is limited to 135 km/h, 0-100 km/h is in 13.5 seconds and the recharge time is nine hours on a domestic supply.

If you were to work out the cost of charging this car on domestic electricity supplies you’ll find that the Zoe comes in cheaper per kilometer than an equivalent small car, say the Iranian made Kia Pride. The estimated cost on a domestic supply over a 9 hour period would work out currently at 99,000 rials just over $3.

From this writers point of view, in conversations with associates across the board, when vexed the question, “Would you rather have a BMW sports car or a Hyundai executive car for the same price?,” the answer is a resounding, BMW of course.