Sales of electric vehicles (EVs) are surging worldwide, with market predictions projecting the industry will generate revenues of USD 623.3 billion globally in 2024. Beyond that, it will grow 9.82% annually, reaching USD 906.7 billion by 2028. EV technology is becoming more popular because people are concerned about the environment and the impact of climate change.
According to Statista Research, battery technology improvements are contributing to more people showing an interest in electric cars and bikes. Most drivers worry about how far they can go before running out of energy, but tech advancements in energy storage have increased battery capacities for vehicles to travel farther. Similar to guidelines on EVs in Southeast Asia, global governments have supportive policies and provide subsidies to reduce production costs, leading to lower car prices.
Furthermore, growth expectations are fueling investment in the EV supply chain, with announcements from 2022 to 2023 showing pledges of USD 500 billion, of which around 40% have been committed. The International Energy Agency (IEA) notes in its Global EV Outlook 2024 report that more than 20 OEMs (Original Equipment Manufacturers), representing over 90% of global car sales in 2023, have a target to sell over 20 million electric vehicles in 2030.
Adoption of EVs in Southeast Asia
In Association of Southeast Asian Nations (ASEAN), the EV market will generate revenues of USD 1.51 billion in 2024. Consumers are concerned about air pollution, their carbon footprints, car expenses and maintenance costs, and finding greener transportation options.
Current industry trends show regional governments are supportive, and major automakers are offering a variety of EV models to satiate customer preferences. Statista Research also notes that unit sales of electric vehicles will reach over 37,000 by 2028.
Some of the leading eVehicle companies in Southeast Asia include Vietnam's VinFast, Hyundai Motors, and Singapore's Neuron Mobility. VinFast sells EVs, eBuses, and eScooters, while Neuron Mobility focuses on eBikes and eScooters for city travel. Hyundai recently launched Indonesia's first EV battery cell production plant in partnership with LG Energy Solution (LGES) to develop an electric vehicle supply chain in the region.
ASEAN governments have initiated various policies and incentives to promote EV manufacturing and adoption. For example, Thailand offers a corporate tax holiday for eight years and a 40% reduction in import duties. Vietnam has a USD 1,000 incentive for purchases and reduced excise duties for batteries, and Indonesians looking to import fully-built EVs receive tax incentives.
Countries are boosting their EV production capacities, with Thailand and Vietnam making 350,000 vehicles, while Indonesia expects to reach 270,000 by 2026. The region has also seen an increase in the presence of automakers like BYD, Toyota, and Honda, among others, to boost production.
Encouraging China to invest in the region has proved successful. Statistics show that the country's BYD has widened its lead over Tesla in Southeast Asia. BYD has been forming partnerships with local conglomerates in Thailand to expand distribution and even opened its first stores in Vietnam.
These measures will benefit ASEAN by reducing carbon emissions, stimulating the economy, creating jobs, and even driving innovation in other industries. They will also enhance digitalisation by merging EV development with the Internet of Things (IoT).
Future of EVs in Southeast Asia
Developing more electric vehicles may be Southeast Asia's next big step, but it faces many challenges. The main obstacles to widespread EV adoption include high prices, inadequate infrastructure to support the shift to greener vehicles and regulatory hurdles in the industry. Since the region has a high population density in urban areas, adopting eVehicles has been hampered by limited parking spaces.
Other potential EV users have range anxiety—the fear of whether the cars can travel long distances without needing a recharge. Some cities are further apart, which may pose a concern if no charging stations are along the way. Statista analysts note that there has been a concerted effort to improve the charging infrastructure in ASEAN, with varied results.
While the region has vast sources of essential EV raw materials such as lithium, cobalt, and nickel, governments and companies must find a way to mine them sustainably. Charging electric cars will also increase the electricity needed by 2035, up to 8% of total demand.
EV technology in each regional market is different. Its unique challenges include government policies and regulations related to emissions standards and fuel efficiency. Underlying macroeconomic factors like interest rates or the global cost of fuel and production have increased, affecting the local markets.
Overall, the future of EVs in Southeast Asia looks promising, with increased investments and a supportive climate for innovation. Increased automaker competition, environmental consciousness, and reduced costs due to subsidies and tax incentives will enhance the industry. Developing aesthetically pleasing EVs to suit customer preferences will also drive regional adoption.
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