May 25, 2010
Number of Flex-Fuel Vehicles in Brazil Passes Ten Million Mark
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
During the month of April, the sale of flex-fuel vehicles represented 91% of all the light vehicle sales in Brazil. According to sales figures from the National Automobile Manufacturing Association (Anfavea), since June of 2007, at least 90% of all light vehicles sold in Brazil were flex-fuel. In April, 226,725 flex-fuel vehicles were sold in Brazil, which is 15% more than during the same period in 2009.
Flex-fuel vehicles can use either 100% ethanol, gasoline, or any combination of the two fuels. If the cost of ethanol is 70% or less than the cost of gasoline, it is more economical to use ethanol than gasoline. Since ethanol is available at every gas station in Brazil, Brazilian motorists can choose on a daily basis which fuel they prefer based on the relative price of each fuel. The price of gasoline in Brazil has remained consistently high over the years compared to U.S. prices because the Brazilian government wanted to give incentives for the development of the ethanol industry.
In addition to having the option of buying 100% ethanol, all the gasoline in Brazil also contains 25% ethanol. As a result, light vehicles in Brazil now consume more ethanol than gasoline.
In March of 2010, the number of flex-fuel vehicles sold in Brazil reached the ten million mark since the technology was introduced into Brazil in 2003. Flex-fuel vehicles now account for 40% of all the light vehicles on Brazilian roads and that is expected to hit 50% sometime in 2011.
Investors and ethanol producers see these trends as well and that is why projections for ethanol consumption in Brazil continue to move higher with no end in sight. Brazil has ample land resources available for the continued expansion of sugarcane production without having to take away land used for food production.