Although APAC’s electric vehicle market is rapidly expanding, the promising ecosystem is facing great challenges, from regulatory framework, to bringing mass reform to the transit infrastructure. Hive Life’s guide probes the growing opportunities within the EV landscape, ways to accelerate adoption, transition, and its real impact on climate change.
The Asia Pacific region plays a pivotal role in contributing to and impacting climate change as global countries take a proactive approach to bring real-time results in their joint pursuit of becoming net-zero. Investments and activity within APAC’s ClimateTech sector increased significantly, reaching a record high for the Southeast Asian region in 2022, with an accumulated value of over US$1.11 billion poured into the landscape.
Over the years, the region has shown a growing demand for energy consumption, as it undergoes rapid urbanisation and development, creating a major barrier for most Asian countries to meet their net-zero emissions targets. The transportation sector alone has one of the highest carbon footprints, accounting for over 30% of all fuel consumption globally. It places significant pressure on nations to improve the infrastructure of their transit networks, building a fundamental need for fuel-efficient, high-performing, and climate-friendly solutions.
Electric vehicles (EV) are one of the promising markets in APAC. With a valuation of over US$229 billion in 2021, and an estimated compound annual growth rate (CAGR) of 35%, it is predicted to reach up to US$2,688 billion by 2029. McKinsey forecasted that the mass adoption of EV models in Asia could significantly reduce the region’s fuel consumption and emissions by over 14%.
The EV market is subdivided into different vehicle categories, based on their propulsion type, including electric, battery-operated, hybrid, and more, along with their power outturn, charging capacity, energy end use, as well as the country of origin, as per industry and government regulatory standards.
The industry is full of new potential, and enables businesses to build on the opportunities within the sector, while offering consumers a better understanding of electric transportation, easing global adoption.
However, the lack of proper charging infrastructure, sustainable electricity grids, and regulatory framework in Asian countries has created major obstacles for the EV sector in unleashing its full potential. Furthermore, owning an electric car comes with a hidden cost- servicing and repair expenses are estimated to be twice as high as compared to a gasoline-powered car. Purchasing the vehicles can also get expensive, followed by costly insurance policies. It presents a great financial disadvantage for the average Asian consumer, its low affordability act as a barrier to the widespread adoption of the models.
Challenges and Opportunities
The electric vehicle market has shown tremendous potential in unlocking Asia’s future growth and business opportunities, yielding great profitability and numerous economic advantages, while building towards carbon neutrality through a greener transit infrastructure. Governments in the region have offered massive incentives to draw investments and accelerate innovation, from improving policies and regulations, to streamlining the development of new solutions, along with subsidising charging infrastructures.
Leveraging these trends are automobile manufacturers across the region who are accelerating innovation within the EV sector, while aiding the mass adoption and production of these vehicles. The rapid rise of the industry has further attracted the attention of global investors.
Combined global funding and investments in the electric vehicle landscape are expected to reach over US$330 billion by 2025, expanding its future growth prospects.
In recent years, Asia has observed a surge in innovation within the electric vehicle ecosystem, as major auto-vehicle brands lead industry-wide adoption. While Chinese suppliers remain among the top EV manufacturers in the region, many startups are emerging in their local markets while innovating new solutions.
Dat Bike is a smart transportation startup founded in Vietnam that developed the nation’s first locally-produced electric motorbike. They aim to replace diesel-powered motorcycles country-wide and become a household name, and are well on their way to achieving this following formal recognition by the local Ministry of Transportation.
Thai Electric Vehicle (TEV) is another company innovating in the space. The automobile manufacturer is working together with the Thai government to transform their public transportation ecosystem, supporting the nation’s net-zero commitment. It has deployed over 1,250 electric and hybrid buses of varying sizes in Bangkok.
Singapore, Japan, Indonesia, and many other SEA nations, have also bolstered their expansion into the EV sector, while accelerating decarbonising initiatives within their transportation networks.
However, with more electric vehicles on the streets, there is an increasing demand for charging points across transit networks. Countries need to gauge their capabilities, while working towards greater infrastructure reform.
Furthermore, publicly accessible electric charging stations are still an eminent issue for the EV sector. As one of the most sought-after utilities in EV infrastructure, its adoption, in comparison to electrically-powered transportation, is low, prompting a greater need for such solutions in the region.
Hong Kong-headquartered New World Development Company Limited (NWD) behind the New World Green Transport Alliance (NWGTA), announced its plan to invest HK$50 million in strengthening the city’s electric vehicle adoption, while installing over a hundred universal EV charging points. Showing great ambition to propel the sustainable evolution of the local electric vehicle ecosystem.
Achieving true sustainability is yet another widely-prevalent issue in electric transportation, as government policies and regulatory measures have little to no coverage of this. Most present-day EVs operate on lithium-ion batteries, made of minerals extracted using water-mining, which is not only unsustainable but also uses various toxic chemicals.
Government bodies and companies ought to seek better ways to sustainably source these minerals, while integrating safe disposal, repurposing, and recycling initiatives, and making finding an earth-friendly alternative their priority.
Electric vehicles being fully net-zero is a misconception as most Asian countries still rely heavily on fossil fuels, accounting for up to 80% of primary energy production. The EV sector still has an active carbon footprint, as most EV charging stations are powered by these nonrenewable sources, although their impact is still significantly lower than conventional gasoline transportation.
This urges governments and regulators to rethink their energy sources and opt for more renewables, while developing smarter, greener, and more well-connected infrastructures, strengthening regulatory frameworks, and moderating unsustainable practices.
The Future of APAC’s Electric Vehicle Ecosystem
Asian manufacturing companies are showing no sign of slowing down. In the coming year, the industry is expected to grow beyond its existing scope. With wider availability and optimisation of electric and hybrid-battery vehicles, the costs associated with operation and maintenance will further drop. Industry innovators are expected to focus on strengthening the efficiency and sustainability of their models through functional product design, while making electric charging points easily accessible.
Government sanctioning and new reforms within APAC’s nascent green transportation scene will be pivotal in paving the way for mass adoption of electric vehicles. To efficiently facilitate this, countries need to keep in mind the true environmental cost of eco-friendly electric vehicles as they work towards meeting international ESG and net-zero commitments.