EVs in Southeast Asia: A Primer

EVs in Southeast Asia

Electric vehicles (EVs) have become the next hot trend across global mobility markets. Here’s a look at what’s transpired so far for EVs in Southeast Asia.

Toyota and Honda designed the Prius and Insight respectively, as the world’s first hybrids. These hybrids were a breakthrough for EVs. Though they did not sell well, they still showed a large opportunity for the global EV market.

Today, the EV market in Asia is having its revolution, led by China. Out of the 7.2 million EVs in use worldwide, China has 2.3 million – a third of the global stock. China sold about 1.2 million plug-in EVs in 2018, over 3x the sales in the US. Cities like Shenzhen have over 16,000 e-buses that cost more than $1 Billion.

At the same time, EVs in Southeast Asia are also gaining traction. It was forecasted that by 2027, South East Asia would grow its EV Market from US$20.27 billion in 2018 to $59.10 billion, according to a report by Meticulous Research.

EVs in Southeast Asia

A report by Deloitte points to five enablers that can help increase the attractiveness of EV adoption in Southeast Asia. These are the total cost of ownership, battery range and life, charging networks, regulatory environment, and value chain potential of the automotive industry in the region.

The report noted that Indonesia, Malaysia, and Vietnam were aspiring markets for EVs in Southeast Asia, with the latter two countries leading in terms of cost of ownership. According to Deloitte’s analysis, Indonesia, Malaysia, Vietnam and Singapore were leading the Southeast Asian EV market, with Indonesia emerging above the rest for regulations, battery and charging sectors, and value chain potential.

In Indonesia, the government aims to increase the production of EVs to 20% by 2025, and has been able to attract major EV players and investors. Many ride-sharing apps have also adopted EVs, while public transport is planning to use all EV buses.

Indonesia is also the largest producer of nickel, a key component of lithium batteries used in EVs. The country placed a ban on exports of nickel ore in order to develop higher-value products locally. However, it will need a lot of investments in order to produce the batteries themselves.

Malaysia has also been able to increase its momentum in the manufacturing of EVs and lithium-ion batteries. Right now, the Malaysia Automotive, Robotics, and IoT Institute are working to build EV buses, made and used in Malaysia. The country also has plans to announce tax incentives under an EV policy directed towards adoption of passenger cars, scooters, motorbikes and commercial vehicles, as well as incentives for manufactures and service providers.

Vietnam’s EV sector is dominated by Vinfast, which produces electric two-wheelers, four-wheelers, and passenger buses. Vietnam also has plans to expand its EV manufacturing and research. Singapore, on the other hand, has high costs for both labor and land, therefore it discourages the setting up of assembly factories. However, although EV adoption is not high, government incentives and increased focus in EVs in public transport have been positive for the EV market in Singapore.

The Philippines passed the Electric Vehicles and Charging Stations Act earlier this year to promote the use of EVs and dial down dependence on fossil fuels. It will set up guidelines for the manufacture, import, use, and regulation of EVs, hybrids, parts, and batteries. Thailand also recently offered tax holidays and tariff exemptions for EV producers and products. Furthermore, Thailand even approved a new EV policy to ensure that all vehicles produced in Thailand by 2035 have to be EVs.

Future of the industry

Overall, the Asian electric vehicle market is increasing at a rapid rate, which will require more charging infrastructure than there is in the current market. Furthermore, the EV market has been heavily subsidized by regional governments.

In Southeast Asia, about two-thirds of respondents in a study noted that they were more willing to consider an EV than they were five years ago, and are likely to take up electrified mobility soon. Moreover, 37% of the surveyed respondents said that they would consider EVs for their next car purchase in the next three years.

However, Anna-Marie Baisden, head of autos research at Fitch Solutions, said in an interview with the CNBC that, “[Asia] is playing catch-up. When we talk about the Asian EV market, we’re predominantly talking about China, which still accounts for around 90% of sales.”

It remains to be seen how the industry will self-sustain. The future is promising, however, and it is likely that the future of the market for EVs will lie in Asia’s hands.

Header Image by Adrian N on Unsplash

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George Lim

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