With its automotive manufacturing capabilities as well as rich nickel resources, Southeast Asia is poised to be the next key market for electric vehicles in Asia. Over the past few years, regulators in major markets such as Indonesia, Vietnam, Singapore, and Thailand have introduced various incentives to attract investments and boost the adoption of EVs among consumers.
In Indonesia and Vietnam—the two biggest motorcycle markets in the region—the EV sector heavily focuses on the two-wheeler segment. In Vietnam, there were nearly two million newly registered electric motorbikes by the end of 2022, accounting for, a small but significant, 2.7% of the total number of motorbikes nationwide.
“This progress, in my opinion, stems from two main reasons. First, people’s environmental awareness has changed, and this is a massive drive on GHG [greehouse gas] environmentally friendly aspects,” said Dr. Morgan Carroll, ESG Director of the Vietnamese conglomerate Vingroup and VinFast at a panel session titled ‘EV evolution in SEA: How to supercharge adoption and growth?’, at DealStreetAsia’s Asia PE-VC Summit 2023 on Sept 6.
The second factor pushing sales is the product quality, range capability, and resale value of electric two-wheelers, which are now comparable to fossil fuel vehicles.
The quality, range , and resale value of electric two-wheelers are now comparable to fossil fuel vehicles.
“People have a choice now, in terms of comparability and responsibility. You could see this astronomical curveball that’s coming for EV adoption [in Vietnam,” he continued. VinFast is a pioneer and the biggest EV company in Vietnam. According to the ICCT [International Council on Clean Transportation] report in 2020, VinFast held a 43.4% market share of electric motorcycles in Vietnam.
Uphill battle
Meanwhile, in Indonesia, EV adoption is slowing. As of June, there were about 59,000 registered electric motorbikes, which is a far cry from conventional motorcycles that number an estimated 128 million units in the country.
However, industry players are confident that the figure will consistently increase due to high demand.
“The demand is really solid. I believe now with the affordability of technology, the manufacturing and supply chain, as well as with government support in terms of the incentives, it [the adoption] will improve quickly,” said Jack Yang, managing director at Indonesia’s Electrum, a joint venture between GoTo and TBS Energi Utama, at the same panel.
Electrum recently commenced the construction of an e-scooter facility in Indonesia that aims to produce 250,000 units per year. “The growth is not linear, it is actually exponential. I think, in general, Indonesia is still on track to achieve its [EV] target,” Yang continued.
In spite of its huge adoption and manufacturing potential, SE Asia faces various challenges to reach region-wide EV adoption. Limited skill availability, infrastructure inconvenience, lack of venture capital investments for nascent local EV startups, as well as environmental dilemmas are some of the problems that need to be addressed by stakeholders in the industry.
When it comes to investments, Julien Mialaret, operating partner at Eurazeo, said that there are three principles very important for the electric mobility space. “One is a data business, ICE vehicles don’t collect as much data as EVs do. So the heart of most companies we invest in is that EV is a data business. Second, we’re investing in both charging and vehicles,” he said.
Eurazeo backs advanced mobility companies in China, India, Europe, the US, and more.
“EV is part of a much bigger ecosystem, it’s a lifestyle choice. So you’re not thinking about EVs alone, you’re thinking about solar, and green energy as well. That creates a lot of opportunities,” he said. Mialaret added that while his firm is mainly investing in China at the moment, there’s a big opportunity for Chinese companies to bring their products to markets in SE Asia.
“Talent crunch has been a burning issue in the Southeast Asian tech ecosystem.”
Another major problem is talent, industry insiders believe. Talent crunch has been a burning issue in the Southeast Asian tech ecosystem, and with demand for EVs increasing, there’s an urgent need to solve this challenge.
James Chan, founder and CEO, ION Mobility, an EV startup based in Singapore and Jakarta, said that his team needs to import talent from all around the world, especially since the company is committed to manufacturing EVs and building battery pipelines in-house.
“Talent is a real problem, especially with our level of end-to-end [supply chain]. Everyone claims to make it but not everyone really does. And the amount of time required here [to build supply chain ecosystem] is much longer,” Chan said. ION Mobility introduced the first model of its electric motorcycle for Indonesian customers at the end of last year and plans to launch it in the first quarter next year.
“So, there’s a need for us to train and experiment to create a better ecosystem. Elevating our supply chain as partners in this long journey together is very crucial. It takes time and it won’t happen quickly. It’s a marathon,” Chan added.
