Asia Pacific – the ultimate showcase of why electric vehicles are the future
The long-term predictions are strong, and adoption is starting to make headway.
Two predictions by BloombergNEF present a compelling case for the future of electric vehicles: one is they will reach cost parity with conventional cars in the mid-2020s, and the other is that, in 2040, more than half of cars sold will be electric…or one third of the global car fleet . Closer to home, Grand View Research forecasts that the Asia Pacific region will show the highest electric vehicle growth, with China already holding the largest electric vehicle fleet at 2 million vehicles.
The International Renewable Energy Association (IRENA) estimates that, by 2025, one fifth of vehicles in South East Asia will be electric. The long-term predictions are strong, and adoption is starting to make headway. The great news for the Asia Pacific region is that progress has reached something of a tipping point that bodes well for a much stronger electric vehicle market in the years ahead.
Extreme population density offers the ideal canvas
When you consider the overall population of 650 million people in ASEAN countries alone, there is certainly scope for far greater adoption. For much of Asia Pacific, traffic emissions are a major concern as transport networks keep pace with development and growth. Environmentally, air pollution is of critical concern. Moving to an emission-free landscape means that social health will improve dramatically – leading to the economic benefit of greater productivity. Electric vehicles are also known to spur the use of greener fuels, which also addresses the growing impact of fuel import costs and prevalence of renewable energy such as solar and wind. According to BloombergNEF, electric vehicles globally are already displacing 1 million barrels of oil demand per day  . In short, reliance on traditional vehicles has a negative cumulative effect, whereas electric vehicles and other greener alternatives, such as hybrids, have a positive cumulative effect. With extreme population density, the Asia Pacific region is the ideal canvas and a powerful proving ground for faster adoption and more innovative thinking.
Regional core competence aligns to growth
With need often comes opportunity. The Asia Pacific region has the potential to move into a leadership position globally if it leverages regional core competencies in areas such as battery capacity, charging infrastructure and vehicle manufacturing, and support industries such as software development. In some ways, it presents a unique competitive advantage when the capabilities of neighbouring countries are considered – particularly in the manufacturing arena.
From Vietnam establishing its own electric vehicle manufacturer to the Philippines’ collaboration with the Asian Development Bank on e-trike take-up. From China and India’s extensive manufacturing capabilities to Japan and Korea’s high-tech developments in both hardware and software. All indications are that the region is taking hold of the opportunity to turn local capability into local value.
One area showing great strides is the integration between electric vehicles, charging infrastructure and mobile apps, created locally. This is delivering impressively seamless communication and flexibility for users – more advanced than we’ve ever seen in internal combustion engine vehicles. Greater collaboration within the private sector, and between private and public entities, will only spur this on.
Industry players recognise difference and the need for flexibility
Population density is a particularly critical factor for most of the major economies in the Asia Pacific region. It also means we’re already seeing countries gravitate toward other business models. For example, where in Europe most countries started with cars and private ownership in their e-mobility journey, many countries in Asia Pacific are finding it easier to start with public transport, such as buses. We expect to see this trend continue for some time yet, particularly as price parity between private electric vehicles and internal combustion engine vehicles, specifically in this region, is still several years off.
Having said that, in pockets like the Philippines, we’re seeing three-wheelers, like rickshaw equivalents, really take off. There’s a strong entrepreneurial mindset that is exploring specific and unique applications in the movement to electrify transport. In general, the mix is proving to naturally adapt to suit each country’s requirements – whether the market for luxury, high-power-charging, long-range vehicles, through to around-town cars and other smaller options. In fact, IRENA estimates that South East Asia will be the most advanced in two and three-wheelers, at 59 million, versus four-wheel vehicles, at 8.9 million, by 2025. BloombergNEF predicts that, by 2040, electric two-wheeler sales will reach 77% of sales  – with sales already significant in China and markets including Taiwan, Vietnam and India.
Government incentives are making an impact
Government leadership is typically an excellent predictor of take-up via incentives, tax breaks, public investment in charging infrastructure, shared standards and encouragement of local manufacturing. The Asia Pacific region is once again making good progress. The region already boasts two of the first five countries – India and China, in addition to Britain, France and Norway – to specifically target an eventual phase-out of internal combustion engine cars. Countries such as Indonesia, Thailand and Malaysia have holistic and comprehensive electric vehicle policies. However, more is needed, primarily in relation to regulations and standards.
There is still a lot of confusion over areas such as charging protocols. Clear direction is essential to greater adoption with minimal waste and rework. Countries like Singapore, that clearly set one standard early on, are realising the benefits of e-mobility at a much faster rate. We still have several countries in Asia Pacific that have not made a decision and it is already creating a domino effect, including stalling progress as operators have no confidence around which technologies to install. In addition, greater government leadership via incentives for operators to install charging infrastructure will only serve to accelerate adoption. We have well learned from countries in Europe that only when the infrastructure became available does take-up really follow.
Now, we’re set to fast-track
In general, the Asia Pacific region is about three to four years behind Europe. That lag can now be used as an advantage. We’ve seen technology evolve, adoption increase and consumer mindsets shift. Now, we have the ability to leap-frog some of that technology. Where Europe started with 50kW chargers on highways that would charge in 45 minutes, today, we are using 300-350kW chargers in as little as 15-20 minutes. What that’s enabling is transport between cities from the outset in a way that wasn’t possible in the early years in Europe.
We are at a really interesting place for the Asia Pacific region where countries can make a decision, launch forward and go, with a much faster time to fruition. Singapore is just one example, going from no infrastructure two years ago to more than 100 DC fast-charging stations today. They are ready to fly – and so is the wider region if the positive trends we are seeing continue.
1, 2 & 3 : https://about.bnef.com/electric-vehicle-outlook/