Asia’s capital cities, including Beijing, Manila and Bangkok, are notorious for congested roads. Traffic jams that can last for hours. “Welcome to my office,” one scion of an Indonesian property empire said on welcoming a guest for a ride through Jakarta’s snarled arteries.
As Southeast Asia industrializes, vehicle sales are unusually high relative to other countries.
It’s not unusual in many parts of Asia to see more than one car in the driveway of a household. Motorcycles have traditionally been kings of the road in this part of the world. Hanoi alone has an estimated 5 million motorcycles on its streets, according to a Guardian report.
Asia has an opportunity to make the most of its position as a huge potential market for electric vehicles (EVs). Consumers are starting to raise concerns over the environmental impact of vehicles powered by fossil fuels. It’s no coincidence that pollution casts a pall over many of Asia’s biggest cities.
No surprise, then, that the demand for greener, more efficient EVs has grown significantly in the last few years. According to Frost & Sullivan’s Global Electric Vehicle Market Outlook 2019, sales for EVs in the Asia Pacific region accounted for 60.3% of the worldwide total.
It may well be that electric vehicles represent the future of transportation in Asia. But there are factors holding back their adoption that need to be addressed for that to happen.
Still too expensive
A typical car buyer in China, Japan or Southeast Asia is highly sensitive about price. While the running cost of an EV is low (around 15% of the cost of running a petrol engine), there is a higher upfront cost, largely due to the high price of batteries. That means it’s a prohibitive investment for the average consumer.
In Thailand, for example, prospective buyers in 2016 were limited to hybrid EVs with price tags over 2 million baht (US$65,000). Compare that with a gasoline-powered small sedan, which can cost around 500,000 baht (US$16,000). Carmakers such as Nissan, Kia, Audi, Hyundai, and Jaguar have since entered the country with their EV models. But all of these still carry hefty price tags that are at least double the price of a standard car.
Cost is perhaps the single biggest factor preventing EVs from going mainstream in Asia. Experts predict that this will change as prices of lithium-ion batteries continue to go down.
Interestingly, other electric-powered transport solutions have emerged to take advantage of this problem for the Asia Pacific region’s electric-car market. For example, Vinfast, Vietnam’s first car manufacturer, introduced its first electric motorcycle in 2018. The company also announced it will be producing 250,000 electric scooters each year at its Vietnam headquarters.Light electric vehicles have also cropped up in public transport. In the Philippines, the Department of Energy has partnered with the Asian Development Bank to introduce electric tricycles (e-trikes). Meanwhile, electric rickshaws have gained traction in major cities in Thailand and India, with operators praising their low maintenance costs compared with vehicles powered by petrol engines.
Ecosystem yet to develop
Compared to the United States and parts of Europe, Asian countries have been slow to develop the infrastructure for electric vehicles. There’s been a lagging response from local manufacturers of lithium-ion batteries and charging stations. While China and Japan have installed over 300,000and 19,000 public chargers over the last few years, respectively, other parts of Asia lag far behind as far as charging stations go. In the interim, players in the private sector have risen to fill this gap. In Singapore, Grab has partnered with SP Group, the operator of the country’s largest public EV charging network, to add 200 “fast-charging” stations, with preferential rates for its Grab fleet. In the Philippines, local oil players like Unioil have slowly introduced EV charging points for the minority of drivers using hybrids and EVs.
Government support still important
Tax breaks and other incentives are a big factor behind strong sales of EVs in China, Japan, and South Korea. Other countries in Asia have picked up on this, but have been slow to provide subsidies to promote the use of EVs. In Southeast Asia, Thailand was the first country to offer incentives for EV manufacturers, as well as lower taxes on sales of EVs. In 2017, the Philippines government enacted a law that would grant tax exemptions for anyone buying EVs and hybrid vehicles. Subsidies are so important that according to a Nissan-sponsored report conducted by Frost & Sullivan, 71% of respondents “opted for tax waivers from the Government as the key factor that would help them switch from conventional cars to EVs.”
The Road Ahead
While electric vehicles are still in their nascent phase in many parts of Asia, consumers in the region are eager to go electric. The same Frost & Sullivan report found that one-third of respondents would consider an EV as their next car, provided that it becomes a practical purchase.
It’s here where governments can really help expedite the adoption of EVs. Policymakers can be more proactive in building the infrastructure necessary to support EVs, whether that’s through government funding or through public-private partnerships. Strong policy implementation, for example, can encourage battery manufacturers to move their operations out of China, improving the availability and cost of batteries in other Asian nations. And of course there are tax incentives that can improve the cost basis for those considering buying EVs.
With more than 5 million EVs plying roads around the world (2 million of which were sold last year alone), these cars are all but guaranteed to be the future of motorised transportation. Asian governments have the opportunity to provide a social good here, not just for consumers looking to save money, but also for the environment, and breathable air region wide.