With growing urbanisation, the Southeast Asian (SEA) countries are witnessing growing traffic on streets and consequently greater air pollution. Besides adverse effects on the health of the population, increasing vehicular emissions are exacerbating the climate change crisis facing the region. As per the International Energy Agency (IEA) Global EV Outlook 2019, electric vehicles (EVs) on the road in 2018 consumed about 58 TWh of electricity and emitted 41 million tonnes of CO2 equivalent (Mt CO2-eq), while saving 36 Mt CO2-eq compared to an equivalent internal combustion engine fleet.
With emissions from internal combustion engine (ICE) vehicles shutting down cities like Bangkok and Jakarta, the writing is clearly on the wall: SEA cities are choking due to emissions from the transport sector. (Toxic smog forced Bangkok to shut down hundreds of schools in January 2019 while in the same year Jakarta announced restrictions on private cars owing to rising pollution.) As a result, governments of the Association of Southeast Asian Nations (ASEAN) are gradually planning to shift from fossil fuel based mobility to electric mobility. This would not only solve the region’s now permanent air pollution problem but also help to cut down import bills of countries where domestic crude oil supply is limited.
EV uptake typically starts with the establishment of a set of targets, followed by the adoption of vehicle and charging standards. Only a handful of SEA countries including Thailand, Singapore, Indonesia, Malaysia and the Philippines have set EV targets followed by supportive policies and regulation.
Thailand is one of the first movers in the e-mobility segment in ASEAN. The Thai government began promoting EVs as early as 2015 and recently, in March 2020, it announced a roadmap to make Thailand a hub of EVs in ASEAN in the next five years. Under the roadmap, the government plans to promote EVs through state agencies and has set a target to produce 250,000 EVs, 3,000 electric public buses, and 53,000 electric motorcycles by 2025. The EV master plan aims to increase EV production to 30 per cent of total annual car production, or about 750,000 units out of 2.5 million units by 2030. Thailand’s industry ministry also plans to launch a three-year car and motorcycle trade-in scheme. The government will mandate the use of EVs by central and state public enterprises, introduce e-buses and bikes, and provide promotional incentives to buyers and manufacturers. Thai state-owned utilities PTT Plc and Electricity Generating Authority of Thailand will together build a network of charging stations within a radius of 200 km with each other.
Meanwhile, Singapore has announced an ambitious target of entirely phasing out ICE vehicles by 2040. The government is planning to offer incentives including rebates of up to S$20,000 on hybrid and electric cars. The number of electric charging stations will also be increased from about 1,600 at present to 28,000 by 2030.
Similarly, Malaysia launched the National Automotive Policy, 2020 (NAP, 2020) in February 2020 which aims to make the country a regional leader in automotive manufacturing. The policy outlines three new key objectives – next generation vehicles (NxGVs), mobility-as-a-service, and industrial revolution. NxGVs include energy efficient vehicles that are equipped with a minimum of level-three vehicle automation. (NxGV technology is classified according to five levels, from driver-enabled vehicles to fully driverless.)
Indonesia too is on the path to increase EV adoption with the government notifying the Acceleration of Battery Electric Vehicle Programs for Road Transportation Regulations in August 2019. This regulation outlines measures to be taken by the Indonesian government to promote and accelerate the implementation of various battery EV programmes in the country. Fiscal incentives proposed in the regulations include tax or import customs relief, discounts on vehicle charging fees, financial support for research or the construction on vehicle charging facilities, and certification for resources or products related to the industry. The provision of charging stations shall be carried out by a state-owned enterprise working in the energy sector and/or another business entity or entities. Initially, this service will be carried out by PT PLN, the state electricity provider, which will then be allowed to enter into a partnership with another state-owned enterprise and/or business entity. However, further details on operational aspects are still at draft stages.
In the Philippines, the Department of Trade and Industry’s Bureau of Philippine Standards has released standards for EVs. The country is also working on a progamme to modernise and electrify jeepneys, the Philippines’ most popular mode of transport, in order to promote its EV programme. As per a study carried out by Clean Air Asia 2015, jeepneys fitted with diesel engines emit 15,492 tonnes of particulate matter pollution per year, accounting for almost half of all the particulate pollution in Metro Manila.
Challenges and the way forward
Despite potential benefits, the adoption of EVs in SEA is picking up at a rather slow pace vis-à-vis the rest of the world. This is mainly owing to lack of government incentives, lack of affordable EV models, range anxiety among drivers, and near-absent public charging infrastructure.
Experts believe that mass deployment of charging infrastructure is the key to driving the growth of EVs in ASEAN. The participation of the private sector can aid in scaling up charging infrastructure in the region but the governments need to define firm standards and regulations as well as tariffs for charging stations. Thailand has taken steps in this regard and revised the wheeling charges and distribution tariffs to support the charging business. It is witnessing increased involvement of the public and private sectors in the charging business. Thai renewable energy company is in track to set up 1,000 charging stations by end-2020. Last year, state-owned utility Provincial Electricity Authority signed agreements with automakers Nissan and MG to set up EV charging stations. In Singapore, the SP Group plans to set up the largest public EV charging network with 1,000 charging points by 2020. Shell is setting up a network of charging stations in Singapore at its service stations with the first such station being commissioned in October 2019.
These developments augur well for SEA’s EV market but there is a need for greater push from policymakers. As per the IEA, leading countries in electric mobility use a variety of measures such as fuel economy standards coupled with incentives for zero- and low-emission vehicles, economic instruments that help bridge the cost gap between electric and conventional vehicles and support for the deployment of charging infrastructure. Further, policy support is needed to address the strategic importance of the battery technology value chain.
Given that the overall ecosystem for EVs in SEA is still developing, the growth of EVs is likely to be slow over the next few years but expected to increase significantly after 2025. As per Bain estimates, the SEA region’s annual new investment in passenger EVs will grow to $6 billion by 2030 and another $500 million will be required in new charging infrastructure to support electrification needs. Further investment in areas like telematics, fleets and their management, and passenger services will make EVs one of the largest growth segments of the next decade.