7 months ago
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Tropical Battery’s expected foray into the electric vehicle market through the distribution of ebikes is in limbo as the energy company awaits clarity from the Jamaican government on its tax policy regarding EVs.
Tropical Battery had hoped to test the retail market with the ebikes, having imported a battery-electric fleet of 20 in mid-2023. The ebikes were stored at Tinson Pen on Marcus Garvey Drive, Kingston.
But the area is notorious for flooding and in one of several downpours in 2023, disaster struck.
“We took out one and paid the duty on it and we left the other 19 bikes there because the government is yet to apply the lower rating for EVs to bikes,” said Alexander Melville, managing director of Tropical Battery Company Limited.
The remaining 19 then got damaged in the bonded storage area where they were awaiting a determination of the level of duties that should be applied. An insurance claim has been made to cover the cost of the damage.
Commissioner of Customs Velma Ricketts-Walker did not respond to queries sent by the Financial Gleaner on how import duty on ebikes were being assessed. A customs agent said on Thursday that right now bikes don’t quality for the special 10 per cent duty charged on EV cars.
All bikes attract duty of 20 per cent, plus other fees, but are exempt from general consumption tax.
Tropical Battery, which is in the business of trading vehicle batteries and tyres, and the installation of energy systems, has been in expansion mode, which included diversification into new services and acquisition of new businesses. For its new foray into the EV market, it struck a deal as exclusive distributor of VMoto bikes, made in China.
The single ebike on which Tropical Battery paid the regular import duties is now a part of the company’s fleet of delivery bikes. Melville says that since then, the company has not brought in anymore of the VMoto bikes since the first shipment.
“There was a lack of clarity on the government’s part on the importation of EV bikes and getting the licence, which is why they were sitting in that location in the first place,” he said, adding that the company is awaiting clarity on the importation policy.
“Therefore that aspect of the programme is on pause,” he said.
The importation of the bikes was part of the company’s Tropical eMobility programme, which focuses on facilitating “transportation through sustainable energy solutions”.
“So far, the programme has made significant strides in research and development, pilot projects, and partnerships with technology providers,” Melville said, while declining to speak specifically on the actual outcomes.
“These steps underscore our commitment to reducing carbon emissions and promoting eco-friendly transportation alternatives,” he said.
The investment in eMobility has been relatively small, focusing on infrastructure, technology acquisition, and talent hiring, he noted.
“This financial commitment underlines our belief in the programme’s potential to drive long-term growth and sustainability in the transportation sector,” Melville said.
For the near term, according to Melville, stakeholders can anticipate the launch of new eMobility products, expanded pilot projects across multiple locations, and enhanced collaborations with partners.
“These initiatives are expected to solidify our foothold in the eMobility market and demonstrate tangible progress towards sustainable transportation,” Melville said.
The eMobility programme is expected to benefit from the recent acquisition of Rose Electronics Distribution Company. The California-based company, which trades as Rose Batteries, specialises in custom batteries, which Melville says complements Tropical Battery’s product range. The cost of the acquisition announced in February was not disclosed.
“This acquisition brings material revenue, cutting-edge technology, and expertise to high-performance battery solutions, enhancing our competitive edge. It opens new markets with its head office and one of its manufacturing facilities in Silicon Valley, California,” said Melville.
Tropical Battery plans to harmonise the operations of its domestic business with Rose Batteries and Dominican Republic-based Kaya Energy, which will include integrating supply chains, cross-utilising technological advancements, and market strategies. Tropical owns 50 per cent of Kaya Energy Group, which it acquired last year.
“These efforts leverage synergies, enhancing efficiency, innovation, and market reach,” he said.
The acquisitions have positively impacted Tropical Battery Company’s, said Melville. The company’s first-quarter revenue for October-December, rose 24.6 per cent year on year to $809 million; while quarterly profit climbed nearly two-thirds from $44 million to $72 million.
“The consolidated companies expect to more than double revenue and profitability. Additionally, it diversifies our product portfolio, strengthens our market position, and accelerates entry into new markets,” Melville said.
Tropical Battery has been around since 1950. Most of its sales revenue comes from conventional lead-acid batteries, with Tropical Battery estimating its market share at about 65 per cent. Since its listing in 2020, the energy company has grown its annual sales consistently from just shy of $1.9 billion to $2.8 billion last year, but profit performance has been mixed. Annual earnings doubled to a high of $197 million in 2022, but fell back to $140 million last year.
The proliferation of EV and hybrid vehicles is still seen as a possible area of growth for the company. The arrangement for the distribution of the VMoto bikes remain active, Melville said.
Tropical intends to further diversify into renewable energy solutions, and is currently “exploring international markets, and investing in research and development” in order to “stay at the forefront of technological advancements”, Melville said.
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