ASEAN EV market poised to grow by 10 percent by 2025

22, Nov. 2021

The new BMW iX3 looks not only sporty but its aerodynamic elements and blue accents bring out the electric nature of the vehicle. It is one of the new EVs available in the Singapore market. (Photo: BMW).
The new BMW iX3 looks not only sporty but its aerodynamic elements and blue accents bring out the electric nature of the vehicle. It is one of the new EVs available in the Singapore market. (Photo: BMW).

By Celine Chen

SINGAPORE, NNA - Southeast Asia may be the fifth largest automotive market in the world, but the takeup rate of electric vehicles is a crawl.

This is not surprising as the supporting network of charging stations is still largely not in place in a nascent EV market yet to take off.

However, there is much optimism now as governments, car companies and green energy providers are making moves to encourage motorists to make the switch.

Research firm Mordor Intelligence believes the EV market in the ASEAN grouping of Southeast Asian countries could grow by a compound annual growth rate of about 10 percent from 2020 to 2025. In 2019, the total number of vehicle sales in ASEAN member states was 3.4 million, according to the ASEAN Automotive Federation.

Mordor Intelligence noted that there have been increasing collaborations among governments, automakers and electricity providers to promote EVs with new regulations and incentives. This has encouraged car-sharing platforms to make the switch first and propel growth in the market.

"Local governments are drafting supporting policies to make EVs more affordable, which will ultimately encourage ride-hailing and fleet owners to adopt EVs," said Mordor Intelligence.

"Vehicle sharing services in the region are updating their vehicle fleet to electric as the new startups are getting huge funding from various EV manufacturers and tech companies," it added.

According to Guidehouse Insights, the Southeast Asian EV market has shown signs of growth as investments poured in.

The research company said, "Although EV adoption continues to grow in markets in North America, Europe, and China, other regions have been slower to adopt clean energy passenger vehicles. Southeast Asia is one region showing promising signs of future EV market growth and development—specifically in countries within ASEAN, which are increasing model availability, purchase incentives, and charging infrastructure investments."

Southeast Asia has been criticized in the past for failing to tackle climate change issues such as reducing dependence on oil in the power and transportation sectors. However, recent commitments by key member states may point to a slow transition toward a more climate-conscious region, said Guidehouse Insights.

Countries in the ASEAN grouping are slowly beginning to launch incentives to make EVs more affordable to buyers.

For example, Thailand is exempting clean vehicles from an excise tax to encourage more EV adoption. The country also aims to manufacture about 250,000 EVs, including 3,000 electric buses and 53,000 electric motorcycles by 2025.

Apart from giving rebates for EV adoption, Singapore will install more than 600 charging points at over 200 public car parks by the third quarter of 2022.

According to Research and Markets, hybrid and electric vehicle penetration only accounted for 0.3 percent, 1.3 percent, and 9 percent, respectively, in the total new passenger vehicle sales in Indonesia, Malaysia and Thailand in 2020.

However, as the automotive market matures, growth in EV sales and charging infrastructure development will bring new excitement to the market, said the research firm.

Indonesia, Malaysia, and Thailand together sold 38,119 units of hybrid and electric vehicles in 2020. Indonesia recorded the fastest growth, with a 47.5 percent year-on-year increase, rising from 720 units in 2019 to 1,062 units in 2020, said Research and Markets.

"The governments of these three countries encourage the sales and production of energy-efficient and electric vehicles. In the long term, the adoption and application of electric powertrain and energy-efficient technology will continue to grow in the automotive market," it said, adding that Japanese OEMs, which have the largest market share in the ASEAN automotive market, will continue to offer hybrid vehicles.

Consumer adoption is a critical contributor for the EV market to flourish, said Milieu Insight, which carried out a survey in the region recently to understand what would encourage them to buy a green vehicle.

It found that more than half of the motorists surveyed in Thailand, Singapore and Vietnam would consider an electric car for their next car purchase. Less than half in the Philippines and Indonesia show such interest while most Malaysians are less enthusiastic.

When asked what was deterring them from going electric, the majority in Singapore, Thailand, Vietnam and Malaysia highlighted the lack of charging stations. High cost was also a leading concern to Malaysians as well as Indonesians.

As for the tipping point that would spur them to make the switch, most Singaporeans surveyed named incentives such as tax rebates.

People who need to travel far longer distances in neighboring countries like Thailand, Malaysia, Indonesia and the Philippines said they would buy an EV if it is as powerful as a traditional car or better than it.

Commenting on the survey results, Siddhant Gupta, VP of Global Energy at Hexagon, said a key challenge for most motorists like him is the limited number of recharging stations available.

He told NNA, "Most people in major cities in the region live in vertical housing, so many of them would worry about accessibility to a dedicated EV charging point in the carparks of their high-rise apartment or even at public carparks. If the adoption rates for EV ownership rise, the localized grid today would not have the capacity to support multiple cars at the same time without grid upgrades – and these upgrades can be expensive."

Therefore, governments in Southeast Asia need to implement measures to overcome grid constraints and increase the count of the chargers at various locations.

"They have to make sure the grid energy is green, or at least have a roadmap of getting greener soon. Nothing would annoy a sustainability driver more than to buy an EV and charge it with electrons coming from coal power plants,” he said.

Look out for Part 2 of this article: Charging EVs in Southeast Asia