The Biden administration has allowed a U.S. company to sell electric cars to Cuba in a bet to help the island’s private sector, but the days American-made Teslas will be rolling on Havana streets are still to come. Instead, cheaper Chinese models, some assembled in Cuba, are already on the island’s roads and available for rent.
One unexpected client? The U.S. embassy in Havana.
The embassy is, for now, putting aside the tough economic war on China’s rhetoric and renting at least four Chinese-made electric models from a Cuban-government-run agency, according to the Cubatrade.org blog, run by John Kavulich, head of the New York-based U.S. Cuba-Trade and Economic Council.
In a statement to the Miami Herald, a State Department official confirmed that the embassy is renting “numerous electric cars that are available for rent in Havana” due to the ongoing fuel crisis on the island and “will continue to do so until the crisis abates.”
“There are no American-made electric cars in Cuba available for rent,” the official added.
Last November, the Biden administration authorized a U.S. company, Premier Automotive Export Ltd., based in Maryland and with offices in Miami, to sell electric cars to small private business owners on the island. No cars have made it to private businesses on the Caribbean island yet, because bureaucratic requirements on the Cuban side have slowed down the process, John Felder, the company’s head, told the Herald.
Felder also got a separate U.S. government license — also the first of its kind — to sell electric cars to foreign embassies in Havana in 2017. He sold the company’s first — and so far only— electric car to the Guyanese embassy in Cuba that year, a Nissan Leaf.
Though the U.S. embassy can import the cars it needs directly, Kavulich questioned why embassy officials did not contact Felder before deciding to pay the Cuban government and use Chinese electric vehicles.
“Why license a U.S. company to export EVs to Cuba- to citizens, private companies, and embassies and then ignore them, not ask for assistance?” Kavulich said. “Adding to the dismay, the U.S. company offered to donate EV chargers and the offer was rebuffed by the U.S. Department of State.
In February 2022, the State Department turned down an offer by Felder to donate and install four chargers at the U.S. embassy in Havana and the residence of the chargé d’affaires.
Citing “impediments in the electrical infrastructure and a lack of trained mechanics on the island to service electric vehicles,” the State Department said at the time that it was “unlikely” its embassy in Cuba would import electric vehicles in the near future.
Felder said he was surprised when he learned the embassy was now renting the Chinese models. He said he was not approached by State Department officials about buying or renting electric cars for the embassy.
China’s advantage in Cuba
But the embassy’s decision underscores a broader reality: Despite efforts to make it into the Cuban market, American companies lag way behind China, which has already built a larger economic presence on the island.
China has become Cuba’s leading trading partner, and Chinese companies have been granted preferential treatment thanks to the two communist countries’ political alliance.
An assembly plant for cars and scooters in Havana, a joint venture between China’s Tianjin Dongxing Industrial and Commercial Group and Cuban state-owned company Minerva, has produced 2,500 electric scooters and 1,500 electric tricycles and is planning to increase production to 10,000 each this year, China’s state news agency Xinhua reported.
In 2015, the Cuban government ordered 719 cars from China’s electric automaker BYD for tourist rentals. In 2021, Cuban state company Transtur said it had incorporated a fleet of Chinese-made electric cars into their rental offers for tourists and had set up a network of charging stations on Transtur facilities.
The State Department official did not say how many cars the U.S. embassy is renting, how much it is paying, nor the name of the government agency providing the vehicles.
One State Department official told the Cubatrade blog that the rental agency is not on the Cuba restricted list —Cuban companies Americans cannot do business with.
Since fuel shortages have been common on the cash-strapped island in recent years, critics said the embassy could have planned and transitioned to electric cars sooner, in accordance with the Biden administration’s policies to embrace green technologies.
The State Department official said the embassy plans to do so in the near future.
“The U.S. Embassy Havana currently does not operate any electric vehicles in its motor pool in Havana,” the official said. “All Department of State vehicles have a lifecycle and the Embassy is currently in the process of transitioning a large percentage of its vehicles to American-made electric vehicles and expects to have that process completed sometime in 2024.”
The U.S. government has recently authorized at least two other Miami-based companies to export cars to small private business owners in Cuba. Earlier this month, Fuego Enterprises, a company run by Cuban-American entrepreneur Hugo Cancio, received a license to export conventional vehicles and hybrids.
An unaffordable technology
But a transition from fossil fuels is still a distant reality for Cubans. The country lacks a robust infrastructure to support electric vehicles, which is why Felder’s company is offering clients who buy a car free charging stations.
But in a country where inflation and faulty monetary policies have lowered state monthly salaries paid in local pesos to the equivalent of $50 or less, cars are a pricey luxury, even more so electric vehicles imported from the United States.
Felder said he is selling EVs in a price range from $35,000 to $105,000 made by Tesla, BMW, Mercedes-Benz and Nissan, among others. He said 10 Cuban clients are waiting to purchase the vehicles.
Felder said his potential clients are private business owners, and he said he, too, was surprised to find out that some may have that kind of money. Still, he said he expects most to choose the most affordable options. His company has sold Cuban entrepreneurs four electric scooters at a much lower price.
Felder, a former Chrysler executive credited with introducing the first electric car to the Caribbean in 2009, said he plans to introduce a relatively new technology to the island: bidirectional EV charging stations that can send back energy from the car to the electrical grid.
“There is a severe gas shortage, so this would make such a difference on Cuba’s energy grid,” he said.
But while the Biden administration has sought to minimize money flows going to the Cuban government, Cuban-government-run companies will take a cut from each sale, as the government mandates that private businesses must use a state import agency to buy all foreign supplies and merchandise.
To the original car price tag, Cuban state companies acting as intermediaries add a fee, sometimes as high as 30% of the price, Eduardo Aparicio, the head of Apacargo Express, one of the Miami-based companies authorized to sell cars to Cuba, said, according to the news site On Cuba.
Felder said he is waiting for the Cuban state import company working with him to get a final authorization “code” from the Ministry of Foreign Investment and Trade.
“The longer they wait, the more money the government is losing,” he said.