ASEAN Entering the Era of Electric Vehicles

By Nadhilah Shani

Wednesday, 1 Nov 2017

Personal mobility has swiftly changed with the introduction of electric vehicles (EV) on the road, which is beginning to reshape the global transportation market. In 2016, EVs hit a new record with 750,000 units sold worldwide, bringing the total number sold to more than 2 million and marking a staggering increase after only crossing the 1-million threshold in 2015.

Bloomberg New Energy Finance sees the EV market making more progress in the coming years, predicting that 54 per cent of new cars sold in 2040 will be of the EV type, which by then will account for 33 per cent of the global car fleet.

Growth of the EV segment is owed to the fact that the technology is advancing, resulting in cheaper essential components like the battery. Rigorous support through government subsidies is also encouraging rapid development and expediting EVs’ penetration of the transportation market.

The International Energy Agency in its report Global EV Outlook 2017 forecasted that EVs will be economical even without subsidies on the total-cost-of-ownership basis among mass-market vehicles in the period of 2025-2030.

The shift in modern transportation toward EVs will definitely influence several energy subsectors in the near future, like oil and electricity. Oil demand from the transportation sector will fall as EVs replace combustion engine vehicles, in a shift predicted to displace up to 8 million barrels of fuel per day by 2040.

While the increasing number of EVs is set to reduce oil consumption on the road, electricity consumption is expected to grow from 6 terawatt hour (TWh) in 2016 to 1,800 TWh by 2040. When this happens, the energy market will change dramatically, especially the whole chain of electricity supply and oil consumption.

While EV development and markets are growing notably in Europe and the United States, Asian countries are beginning to play a significant part. China is now the largest electric car market in the world and by far the global leader in electric modes of transportation. India is also keen to develop EVs and has set an ambitious target of electrifying all vehicles in the country by 2032. Businesses in Japan and South Korea, already key players in the automotive industry, are expanding in the electric car segment as well.

It is interesting to see where ASEAN will stand in this global EV development. ASEAN, the sixth-largest economy in the world and third-largest in Asia with a population of 629 million people in 2015, is certainly a promising market for EV. ASEAN is on the way to entering the EV era. The region has shown interest in EV transportation, as reflected in efforts carried out in recent years.

The Singaporean government, led by the Electricity Market Authority (EMA) and Land Transport Authority, has a test-bed EV program since 2009 and collaborates with international EV enterprises like Renault, Bosch and Mitsubishi. Singapore also plans to launch its first EV car-sharing program this year.

The Philippines also has programs for developing EV in the country since 2013. Supported by the Electric Vehicle Association in the Philippines (EVAP), some EV programs have been started, for instance, the Motor Vehicle Development Program, the DOE E-Tricycle Program and the Industry Development Program. In parallel with this, the government has enacted policies supporting EVs through IPP 2014-2016, Executive Order 488 and PNS for Electric Vehicle.

In Thailand, interest is marked by the 2015 establishment of the Electrical Vehicle Association of Thailand (EVAT), which brings together academics and business representatives. EVAT is in charge of promoting EV use across the country. The Thai government also provides financial support through tax breaks for green gar production and has exempted EV buyers from excise.

In Malaysia, the authorities have set a target of having 100,000 EVs, 2,000 electric buses and 125,000 charging stations on the road by 2030 as part of the technology master plan and electric mobility blueprint. EVs made headlines in Indonesia in 2012, when the government unveiled Tucuxi, a locally made EV prototype.

Even though that project was discontinued, the Indonesian government has since committed to facilitating EV development by producing other EV prototypes hand-in-hand with universities and the private sector.

While the high interest in EVs in ASEAN is promising, there are considerable challenges that may hinder adoption in the region. There are many questions concerning the readiness of ASEAN member states. These pertain particularly to a lack of charging stations and road infrastructure to support EVs. Socio-economic problems like traffic congestion may be a practical hindrance and should be dealt with before EVs are introduced. It is also worth noting that there is still a noticeable discrepancy in electricity infrastructure within the region, making EV a near prospect for some but a distant dream for others.

Next, the potential market for EVs needs to be evaluated, since EVs are currently seen as a luxury only affordable for a small percentage of the population. Policymakers should set a target and enact a series of policy strategies to create a conducive investment climate for EVs. ASEAN member states (AMS) may also want to consider the wider perspective of using EVs not just for individual transportation but also for public transportation.

A more domestic approach to introducing EVs can be considered, such as by retrofitting the ever-present motorcycles in countries like Indonesia and Vietnam with electric engines. The industrial sector needs to be prepared and encouraged to participate as well, so it can also benefit from EV technology. Local industries should take part in this shift and should engage in partnerships with potential big EV players that can transfer knowledge in the long term.

Moreover, it is important to evaluate the urgency of introducing EVs in ASEAN, since its adoption in the region impacts electricity and oil industries. AMS needs thorough masterplans and targets for electric mobility to prepare for a smooth implementation. With clear and tangible milestones, ASEAN can look forward to entering the global EV arena. In the end, thoughtful action in introducing EVs can be aligned with ASEAN’s aspiration to achieve the targeted 23 per cent renewable energy contribution in the energy mix by 2025.

This blog post appeared in The Jakarta Post, 25 october 2017.

Subscribe to our newsletter