South East Asia or ASEAN has a dynamic motor vehicle industry with five major “producers” – Indonesia, Thailand, Malaysia, the Philippines and Vietnam accounting for over 4 million units in product. We take a look at the insights into the region’s electric vehicle (EV) market from Nissan’s white paper, The Future of Electric Vehicles in Southeast Asia.”
As the region’s EV market continues to grow, Southeast Asia is poised to lead the next wave of growth in the industry. When considered as a single region Southeast Asia has the fifth largest market in the world, ahead of Russia and Brazil.
With a growing market of over 3 million vehicles, the electric car industry is further enhanced by the region’s integrated supply chain spread across the automotive producing countries. Expanding this integration through further cooperation of common specifications, approvals, integrated customs procedures and eventually a harmonized taxation system will further augment the investment potential of the EV market of the region.
Status of the current EV Ecosystem
Despite the benefits of EV adoption and optimistic long-term market projections, the region has been reticent in “electrification.” This needs to be addressed by governments in the region who can play a pivotal role through incentives, adopting standards, aligning taxation norms and in facilitating the implementation of a charging infrastructure.
The Big 3 – Thailand, Malaysia and Indonesia, have comprehensive EV policies overseeing the development of the entire EV ecosystem, promoting consumer demand and incentivizing private investments across all aspects of their EV industries. And while smaller markets of the Philippines and Singapore have not embraced an integrated ecosystem, they have implemented various automotive policies which are pushing the EV agenda.
The paper reports that most governments in Southeast Asia realize that ensuring the availability of a charging infrastructure is vital for widespread EV adoption. They are also aware of the challenges, both in time and in costs. This opens a unique opportunity for private collaboration and investment at a massive scale which would be an effective solution to fast tracking EV penetration in the region.
A case for EV adoption
Increased urbanization has resulted in traffic congestion and air pollution in many Southeast Asian countries. Added to this is the increasing demand for conventional fuel, putting severe pressure on fuel import costs.
EVs appear as a solution to these challenges and many other mobility issues. They are emission free which can impact on the quality of air, increasing the health of the urban population which will impact productivity. Electrification can also reduce dependence on oil and petrol, promoting diversification of greener or locally available fuels such as CNG, biodiesel and ethanol. Additionally, renewable energy sources of solar and wind power can be used to run EVs. Technology trends such as remote vehicle operation will also be fast tracked through EV adoption, and electric vehicles are pivotal in making this happen.
Factor’s influencing purchasing decisions
Surprisingly, the region’s low EV uptake has not impacted negatively on the customer base. The Nissan survey shows that contrary to popular belief, the high cost of EV is not an impediment. The survey reveals that safety and charging concerns are in fact the areas of concern and that customers are motivated by their care for the environment and as a result, are ready to pay up to 50% higher than the comparable conventional car to own an EV.
Government can expedite the adoption through incentives. This is supported by survey findings which show 3 in 4 respondents are ready to switch from conventional cars to EVs if taxes are waived. Additional non-financial motivations include installation of charging stations in apartment buildings (70%), priority lanes for EVs (56%) and free parking (54%).
The survey also reveals that purchasing decisions are influenced by the source of power and whether it is renewable. This is supported by findings that 81% (out of 1800) respondents surveyed mentioned that their choice would be significantly influenced by the source of power FIG 7. Concern for the environment was particularly significant for customers in the Philippines, Vietnam and Indonesia.
Southeast Asia’s future is electric and greener. However, the region will have to overcome obstacles of mindset and resources in order to effectively implement electrification. Change in mindset and habits needs to occur on a national level so that customers change their usage of cars. Customers also need to recognise the dangers of conventional fuels, rejecting this energy source in favour of cleaner, greener energy.
Leapfrogging in EV requires strong collaboration between public and private parties to devise a long-term approach which specifically addresses each market’s unique situation. This will facilitate a steady penetration of EVs, helping the region to realise its potential as one of the most dynamic regions in the global automotive market.