Elec­tric Cars; we look at how Nor­way has be­come a world leader in the EV seg­ment and what Asia can learn

An­a­lysts and government of­fi­cials recog­nise the need for decades­long strate­gies and sub­si­dies to de­velop the EV in­dus­try in Asia

Norway-Asia Business Review - - Contents - HAR­VEY BROCK

Sev­eral coun­tries in South­east Asia have stated their in­tent to be­come xelec­tric ve­hi­cle (EV) man­u­fac­tur­ers, notic­ing the enor­mous growth po­ten­tial for the mar­ket. But none are in a po­si­tion to de­velop such pro­duc­tion hubs with­out more vig­or­ous state sup­port, say an­a­lysts. Thai­land, Malaysia and the Philip­pines have all in­di­cated that they want to be­come man­u­fac­tur­ing cen­tres for pro­duc­tion and as­sem­bly of EVs, but none of them have de­cided on fi­nan­cial in­cen­tives that would draw EV com­pa­nies to in­vest there. The ve­hi­cles would have to be man­u­fac­tured for ex­port as there is al­most no mar­ket for them in South­east Asia yet.

The Thai government has made EV pro­duc­tion a na­tional pri­or­ity, list­ing it as one of 10 in­dus­try clus­ters to be the fo­cus of the coun­try’s next growth phase. Though it has vowed strong sup­port, the Board of In­vest­ment has not de­cided on in­vest­ment priv­i­leges yet while the En­ergy Min­istry is writ­ing a plan to build EV fa­cil­i­ties such as charg­ing sta­tions.

The prob­lem is it doesn’t make sense for the government to of­fer enough in­cen­tives to off­set the high cost of EV bat­ter­ies to make EVs af­ford­able, thus cre­at­ing de­mand and en­cour­ag­ing fur­ther in­vest­ment, Vichai Ji­rathiyut, pres­i­dent of the Thai­land Au­to­mo­tive In­sti­tute, told the Bangkok Post.

“Re­ly­ing on such priv­i­leges could cre­ate a huge bur­den for the government. And the Thai government is un­likely to pro­vide a sub­sidy to lower EV prices and sup­port sales since it re­quires a huge bud­get,” he said.

Siam Com­mer­cial Bank’s Eco­nomic In­tel­li­gence Cen­ter pre­dicts suc­cess­ful mar­ket pen­e­tra­tion of EVs in Thai­land would take a decade. The re­search house notes man­u­fac­tur­ers still can­not agree on tech­nol­ogy that would best meet con­sumer de­mand and EVs re­main pricey, largely be­cause of the cost of bat­ter­ies. As of last year, EV sales ac­count for less than 1% of global car sales.

Thai Deputy Prime Min­is­ter Somkid Ja­tus­rip­i­tak in­sisted the coun­try must forge ahead as this tech­nol­ogy is the fu­ture and shows huge con­sumer de­mand. To in­crease con­sumer aware­ness, the government re­centlyal­lowed im­ports of com­pletely built-up EVs pro­vided im­porters in­vest in do­mes­tic pro­duc­tion of the same model within a few years.

The En­ergy Min­istry set a goal for EV units in Thai­land to rise to 1.2 mil­lion by 2036, but this would re­quire a huge out­lay to build up EV in­fra­struc­ture, specif­i­cally hun­dreds of charg­ing sta­tions, said Mr Vichai. The min­istry, en­ergy flag­ship PTT Plc, and sev­eral ma­jor au­tomak­ers signed a mem­o­ran­dum of un­der­stand­ing to de­velop EV charg­ing sta­tions across the coun­try. Thai­land cur­rently has four charg­ing sta­tions.

Most of the early Thai government pur­chases of EVs are for buses and minibuses.

Hiroyuki Fukui, pres­i­dent of Toy­ota Mo­tor Asia-Pa­cific, said pol­i­cy­mak­ers in Thai­land and ASEAN need to make the public un­der­stand the im­por­tance

of en­vi­ron­men­tal con­cerns if the re­gion wants to be­come an EV hub. That lack of recog­ni­tion along with the higher cost of EVs has lim­ited their sales in South­east Asia, Mr Fukui told the Bangkok Post.

Thai­land had 70,285 hy­brid and plug-in hy­brid EVs reg­is­tered in 2015.

Be­fore Ja­pan was able to sell 4.38 mil­lion hy­brid EVs do­mes­ti­cally, the Japanese government and car­mak­ers had to map out a 20-year strat­egy for the au­to­mo­tive sec­tor in­clud­ing en­vi­ron­men­tal in­no­va­tion, CO2 reduction, traf­fic flows in big cities and green man­u­fac­tur­ing plants, Hisashi Nakai, public af­fairs spokesman for Toy­ota Mo­tor Corp, told the Bangkok Post.

The government’s strat­egy also utilised re­search and de­vel­op­ment, demon­stra­tion pro­grammes and longterm mar­ket sup­port such as ar­ti­fi­cially cre­at­ing niche mar­kets for tar­geted tech­nolo­gies, he said. Toy­ota eventually in­tro­duced its Prius hy­brid in 1997 thanks to gen­er­ous government tax breaks and sub­si­dies.

In the Philip­pines, in­dus­trial gi­ant Ayala Corp is look­ing to part­ner with for­eign au­tomak­ers to pro­duce EVs. The econ­omy is boom­ing there and new car sales in the first half of this year grew 28% year-on-year.

An­nual EV sales in In­dia are pal­try at less than 1,000 units, but au­tomaker Mahin­dra & Mahin­dra is keen to en­ter the seg­ment as well. And Chi­nese on­line en­ter­tain­ment firm LeEco an­nounced in August it plans to start making EVs with an in­vest­ment of USD 3 bil­lion. Like Ayala, LeEco has no prior au­to­mo­tive ex­pe­ri­ence.

China may well lead the way for the EV mar­ket in Asia, with a raft of new star­tups bet­ting that the ur­ban mass mar­ket will de­velop a taste for elec­tric cars. LeSEE, Nex­tEV, Fu­ture Mo­bil­ity, Qiantu Mo­tor, and WM Mo­tor are all angling to take ad­van­tage of Chi­nese government sub­si­dies that it hopes will de­velop the mar­ket.

Many Chi­nese star­tups see a mar­ket for af­ford­able EVs with mo­bile in­ter­net con­nec­tiv­ity, made from low­cost, high-qual­ity parts from China, that can be shared or leased when needed for city dwellers, re­ports Asia Times.

Sin­ga­pore en­vi­sions a sim­i­lar model and the trans­port min­is­ter for the citys­tate re­cently an­nounced a scheme that will see 1,000 EVs in­tro­duced as part of a car-shar­ing pro­gramme along with 2,000 charg­ing sta­tions. The government also pro­vides car­bon re­bates to EV own­ers in cash af­ter the cars pass CO2 emis­sions test for the elec­tric­ity gen­er­ated to charge the cars.

The Sin­ga­porean government may also in­tro­duce EV buses soon, but Trans­port Min­is­ter Khaw Boon Wan re­it­er­ated public tran­sit is the green­est form of trans­porta­tion be­cause even though EVs pro­duce no tailpipe emis­sions, the process of gen­er­at­ing the elec­tric­ity they con­sume emits car­bon, he told www.eco-busi­ness.com.

Malaysia’s Am­ber Dual Sdn Bhd signed a joint ven­ture agree­ment in May with China’s Bei­jing Auto In­ter­na­tional Cor­po­ra­tion (BAIC), one of the global leaders in EV pro­duc­tion, to de­velop a man­u­fac­tur­ing plant in the coun­try. Out­put is ex­pected to com­mence next year. BAIC al­ready has a plant in Malaysia that per­forms com­pletely knocked down ve­hi­cle as­sem­bly for cars with nor­mal en­gines, hy­brids and EVs.

There are four plat­forms of EVs. Hy­brid elec­tric ve­hi­cles and plugin hy­brid elec­tric ve­hi­cles were first de­vel­oped with two sys­tems, elec­tric­ity/ petrol and elec­tric­ity/diesel. Bat­tery elec­tric ve­hi­cles were later de­vel­oped, which are fu­elled purely by elec­tric­ity. Fuel-cell elec­tric ve­hi­cles rep­re­sent the lat­est tech­nol­ogy.

There has been tremen­dous in­ter­est in EVs glob­ally. Within three days of Tesla of­fer­ing its new “af­ford­able” Model 3 sedan, the com­pany had re­ceived de­posits for 276,000 or­ders. And in Nor­way roughly one-third of new car pur­chases are EVs, with the seg­ment reporting 71% growth in 2015.

PHOTO: STEVE JURVETSON - FLICKR: TESLA AUTOBOTS

PHOTO: MARIORDO As of June 2016, the Nis­san Leaf (left) is the world's all-time top-sell­ing high­way-le­gal all-elec­tric car (over 228,000), and the Chevro­let Volt (right) is the world's best-sell­ing plug-in hy­brid (about 117,300).

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