The first Monday of October accelerated the spiraling death of the internal combustion engine as General Motors, the world’s third-largest automaker, joined companies such as Tesla, Ford, Volvo, Jaguar, Land Rover, Nissan, and Toyota in publicly committing to a “zero emission” future. Achieving this future is a unique cross-industry opportunity to understand the dilemma of increasing access to medicines for the poorest of the poor. The challenges of making electric vehicles (EVs) more than niche are the same for limited access to expensive medicines in low-resource settings: affordability, availability and support infrastructure.
This past summer, two things elicited a tipping point of optimism that EVs will become mainstream—and much faster than anticipated. First, Tesla delivered its Model 3 sedan, the company’s first mass-market EV offering, to its first buyers. Second, the Bloomberg New Energy Finance Electric Vehicle Outlook 2017 forecasted that 54 percent of new car sales will be electric and one-third of the global car fleet will be electric by 2040. Among other considerations, the report implies that EV pricing will become affordable.
Globally, EV pricing depends heavily on government subsidies such as tax rebates to reduce customer cost. In 2016, plug-in vehicles made up less than 1 percent of new passenger-vehicle sales worldwide, mainly due to high upfront costs, but governments worldwide have aggressively worked to reduce their cost. In Norway, a European leader in EV adoption, EVs are exempt 25 percent of value added tax on purchases since 2001 and leases beginning in 2015. China exempts electric cars from acquisition and excise taxes worth $6,000 to $10,000 per car. In the US, federal tax credits can total $7,500 on EV and plug-in hybrids.
In access to medicines, reasonable optimism is a start. In 2015, several blockbuster new drugs to cure Hepatitis C, which affects more than three million Americans, were well over $1,000 per pill. Now, medications such as Sovaldi and Harvoni are reaching some of the world’s poorest people, many of whom earn less than several dollars a day. This is due to pharmaceutical companies negotiating directly with governments in low-income countries (LICs) to reach a price more reflective of their economic situation. Through agreements with generic drug companies and by offering discount prices to these countries, the price of these medications has reduced dramatically, in some cases up to 99 percent.
In these LICs, access for the poor comes through a public health system managed and financed by the government. But in public health systems, resources are finite, and many LICs allocate most resources to diseases such as HIV/AIDs or combatting child mortality and maternal health issues. Therefore, expanding access to Hepatitis C drugs means doing more with the same set of resources and finances.
Until recently, committed manufacturers were conspicuously missing from both of these realms. But today, automotive companies are embracing EVs on a large scale, and pharmaceutical companies are aggressively reducing drug prices. Toyota is hoping to produce all zero-emissions vehicles by 2050, and Volvo has said that from 2019 all new models would be equipped with an electric engine. (General Motors and others haven’t committed to a date.)
However, a lower price doesn’t guarantee affordability. A Tesla Model 3 at a base sticker price of $35,000 is arguably not mass-market. And even Hepatitis C drugs reduced by 99 percent come with other costs, including laboratory tests, doctors, and nurses. This can prove too much for the poorest populations and the health systems in their countries.
Beyond direct customer costs or out-of-pocket patient expenses is the issue of infrastructure. EVs’ charging times and limited range are palpable concerns. They are dependent on battery performance and a network of convenient, accessible charging stations. Bloomberg’s 2017 upward recalculation of EV adoption, from 2016 projections, cited falling prices for ion-lithium batteries as a significant underlying factor. It also cautioned that a weak charging infrastructure—specifically the lack of home charging—will hinder sales.
A weak diagnostic infrastructure also impedes efforts to expand access to medicines. In Rwanda, for example, it is estimated that about 55,000 adults have Hepatitis C, but fewer than 5,000 know of their disease. Treating those with Hepatitis C requires that health systems find out who has the disease, test people, and then provide patients with a treatment regime.
Ultimately, the diffusion and impact of breakthrough medicines and automotive clean technologies is tethered to how robust the enabling infrastructure is.
The EV industry is making progress. In February, the multinational utility firm E.ON and Danish e-mobility service provider CLEVER partnered to install hundreds of ultra-fast 150 kilowatt EV chargers every 120-180 kilometers on the main European highways. In Denmark alone, E.ON is operating 1,200 public charging points and 39 ultra-fast EV chargers. According to the Danish Energy Association, there are more EV charging docks (2,030) than ordinary petrol stations (2,028).
By contrast, diagnostics infrastructure in low-resource settings is more a mix of investigation than implementation. In May, the University of Edinburgh launched a five-year study that looks at devices, design, deployment, and the interactions between humanitarian, security, and corporate stakeholders. Meanwhile, Partners In Health’s work with the Rwanda Ministry of Health is providing a glimpse into what might be possible in the short term. The organization’s recent SHARED study is examining whether the cure rate using new Hepatitis C medications can be just as high in LICs as in developed countries while using fewer laboratory tests and regular hospital staff (as opposed to specialist-trained doctors and nurses).
Whether it’s EVs or medicines, achieving the same or better at a lower cost is more realistic than we think.