SEA car production aligned for EV transition
The prosperity of car manufacturers depends on their ability to serve local markets combined with successful export to international markets. Southeast Asian (SEA) OEMs have been successful at both, benefiting from political and economic stability, good accessibility, and the ASEAN free trade agreement, enabling export to other SEA countries. These positives are now being redeployed for the next phase of car manufacturing: electric vehicles.
Sustainability versus Automotive Trends
It is not surprising to see OEMs transitioning to EV production as global demand – or at least European demand – for electric and electrified vehicles is on the rise. To see this happen in a region where renewable energy is (almost) not available however, is surprising.
As a reminder, sustainability performance of electric vehicles is not only measured by the vehicle’s output, but also by measuring how “clean” the electricity is, that powers that vehicle. As such, countries where electricity is generated by burning coal have an obviously worst “electricity efficiency factor” than countries that produce renewable energy.
In addition, the lack of charging infrastructure makes it almost impossible today to charge on-the-go, which means that people opting for electric, will have to install home chargers. Again, a limitation to scale up EV sales, as few people have enough space to do so.
OEMs & EV manufacturing
Regardless of the rationale – or lack thereof – to produce EVs, the following OEMs have solid intentions to push electric vehicles to the market:
- Hyundai has started full-scale production at its plant in Indonesia.
- SAIC-GM-Wuling Automobile will produce a compact and cheap (below $5000) EV in Indonesia.
- Great Wall Motor has become a major EV player in Thailand and has discounted the price of the Ora Good Cat by 8% to boost sales.
- Thailand’s state energy group PTT will start producing EVs from 2024, in collaboration with Foxconn.
- Volvo Cars will assemble EVs in Malaysia.
- The Fieldman Group, a Malay commodity producer, will start building an EV plant in collaboration with China’s Changan Automobile.
- VinFast, the automobile section of Vietnam’s Vingroup conglomerate, was amongst to first to propose a locally manufactured EV in SEA.
Philippines have been slower than its neighboring countries but are now mandating logistics and transportation companies to electrify at least 5% of their fleets. Also missing in the list is Toyota, although the Japanese giant will be selling its limited range of EVs in Thailand this year, planning to produce in the country by 2024.
SEA countries are actively pushing for EV adoption and manufacturers are keen to comply, even though it’s impossible to conceive that they don’t realise that EVs are not performing much better than ICE vehicles. So, the reasons must be different.
Firstly, air pollution, especially in Asia’s megacities, is dramatic. This is mainly due to a combination of older vehicles, buses and trucks with inefficient engines and thousands of motorcycles. Electrifying will at least – superficially perhaps – contribute to making cities more pleasant.
Next, petrol cars will always run on petrol, whilst electricity might be generated by coal today, but could be generated by wind or solar tomorrow. In other words, EVs have a better potential of becoming “clean” than ICE vehicles.
Also, the global demand for EVs is higher than the offering. Asian manufacturers have already demonstrated their ability to be more agile than Western OEMs in turning their companies around and supply what the consumers are looking for.
Finally, it’s clear that Asia will play a major role in global EV supply; Hyundai and Kia are good examples, but it’s especially interesting to see China’s manufacturers being able to offer extremely cheap EVs that are very suitable for Asia’s mega-cities.
For the Fleet Manager
From a sustainability performance, it remains doubtful that transitioning to EV in APAC makes actual sense. Nonetheless, in a foreseeable future, EVs might very well become the default for the region. And, as Asia is Asia, the lack of chargers is very much a status quo. Nothing more.