APAC in 2022: Moving towards global EV dominance
APAC is becoming quite a stronghold for the electric vehicle (EV) world in terms of its vast advantages and better resilience against global issues.
One remarkable feature of the APAC market that became more obvious in 2022 is its dynamic environment, a younger market not staying under the shadow of traditional brands but emerging as the birthplace of several entrepreneurs. From battery production to raw mineral dominance, APAC invests tremendously in the global arena, spearheading the significant development of new energy vehicles (NEV). And there are many reasons for that:
According to Global Data, China alone holds more than 70% of the global EV production capacity and is the biggest EV market, with 3.4 million sales in 2021. Yet, the other players in the region have much to show for it:
- Indonesia holds 22% of the global nickel supplies,
- Vietnam is on the path to becoming a significant EV player,
- India shows great potential for sustainable mobility.
The advantage of APAC appears to be the less complex supply chains. Chinese and Korean companies have secured most of the minerals in the region. Yet, every essential player in the APAC market will face different internal and external challenges in 2023, most notably increasing inflation. APAC expert Yves Helven shared his thoughts about the major players and rising powers in the region for the coming year:
The most critical year for China
Chinese investment strategy got even bolder in 2022. The country is investing all across Africa and pouring billions of yuan into Latin America. The Chinese economy is evidently more significant than its geography. The frantic global investment strategy reflects the needs of the Chinese market. If you need resources you need, and it is not even proximity, then you expand the borders of your reach. This is what China is doing right now. At this point, a huge question arises for China in 2023. So far, the Chinese people have adopted the lifestyle of a growing economy, feeling a positive change in the last decade. Now, the unstoppable growth trend is slowing down China because the prosperity is rising for not one, but 1,5 people. With enormous investments and increasing welfare, China will seek the answer to how to avoid the slowdown it is facing. For that, China is likely to choose one of the two options:
- Shrink the economy and hold the investments,
- Move on with investments along with necessary measures.
Is Japan stumbling?
In what has been an exciting year for Japan, the yen has shrunk to its lowest value in decades, which increased profits to the dollar-based trade. But things won't be tolerated in the second year of the devaluation. Japan is to adjust the yen's exchange rate again before the fiscal year, as it would also be adjusting to reality. A country with supply chain problems, an ageing population and increasing inflation will have to take decisions in 2023 too. Nevertheless, Japan is not so quick in taking action compared to China.
Secret potential: India
India has cheap labour and is also an up-and-coming EV market. Yet, the complex administration system in the country prevents the central government from harmonising the national EV ecosystem. On the other hand, India has a tech-savvy young population and consumers who prefer cheap, short-range EVs. Especially for the micro-mobility options, India is a ticking bomb for three-wheeler and other innovative mobility choices. With better administration, India will likely become a significant player in the niche mini market.
A new power: Vietnam
Vietnam has been swapping places with China as a cheap electronics manufacturer. Being a highly industrialised country with a high population and having overcome Covid relatively unscathed, Vietnam is now on the offensive in the EV world. Technical know-how has dramatically increased in the last decades through investments, which inspired entrepreneurs in the country. One of them, VinGroup, is active in dozens of sectors, including education and retailers. Now, the group's EV branch, VinFast, is rapidly climbing the steps in the EV world with giant partnerships in the US. The crucial advantage of Vietnam is that it is rich in minerals and directly accesses supply chains along its huge coastal border.
APAC Fleets and Policies
The supply chain will be a global issue in 2023 and not limited to APAC. On the contrary, APAC enjoys a robust supply chain network, with countries rich with sources in close proximity. So far, APAC reflects a pattern of a natural way of business growth. With more robust growth than Europe and the US, APAC draws vast investments, with an increasing need for more efficient and safer fleets.
The incoming recession will decide the strategy for the coming year. Many companies will carefully consider their budgets and how this will affect their fleets. It may be shrinking or enlarging the fleets with different strategies. Nevertheless, everyone will be saving more.
The main image is courtesy of Shutterstock; the in-article photo shows Yves Helven.