As countries scramble to achieve net-zero greenhouse gas emissions by 2050, electric vehicles (EVs) could be the answer to solve this persistent problem. EVs provide many benefits compared to vehicles with an internal combustion engine (ICE), including zero tailpipe emissions, lower maintenance costs, and a significant reduction in noise pollution.
With Asia being earmarked to experience tremendous growth in the EV market, this article will look at why EV adoption is an issue in the region and the policies three countries — China, Singapore, and Vietnam — have implemented to embrace this mode of transportation.
The challenges that hinder EV adoption in Asia
Consumers are becoming savvier as they have indicated a growing interest in purchasing an EV. However, there are some factors that are preventing EVs from becoming a norm in the region.
The current transportation infrastructure is unable to support an all-EV population due to a lack of sufficient charging stations. Drivers may get frustrated as they fight for limited stations, which could be a common occurrence in shared carparks. In contrast to Western countries, Asia is too densely populated to install a charging point for every household.
Furthermore, transportation habits need to be changed when driving an EV. Cars with an ICE only require a few minutes to be refueled at a gas station. Meanwhile, EVs are powered by a lithium-ion battery, which can take 4–10 hours to be fully charged. EV owners often need to plan their routes ahead of time to optimize their battery capacity.
As a result, range anxiety is a major barrier to EV adoption — which is the fear that the EV does not have enough power to complete the journey before they reach a charging point. A chicken-and-egg problem persists where drivers would be more willing to commute using an EV if there are enough chargers around, but charging providers are not incentivized to expand their network if these stations are not heavily used.
In addition to this, McKinsey reports that cars with an ICE are usually cheaper — with the total cost of ownership being 50-70% lower— compared to EVs in Asia.
The costs of manufacturing an EV are high, as cobalt, nickel, and lithium are all involved in producing the battery that powers the vehicle. These raw materials have risen in price due to the pandemic, and companies have no choice but to increase vehicle prices to maintain profitability.
This higher upfront cost may discourage a typical household in these countries to convert to an electric mode of transportation.
How Asian governments are addressing this problem
To tackle some of these challenges, these are some of the breakthroughs that have been made within the region.
China
As the biggest culprit of greenhouse gas emissions, China has stepped up as a global leader in the EV industry to tackle this issue. Government subsidies have been established since 2009 to encourage EV production within the country, which have been effective in promoting EV adoption. However, these subsidies have been burning a hole in China’s reserves, with USD 5 billion being spent between 2016 and 2020 to subsidize over 1 million EVs.
As a result, the government has announced that it will be phasing out these subsidies. With the demand for EVs now being determined by market forces, there are concerns that this may affect the growth of the EV sector in China.
The Chinese government did not solely rely on subsidies to boost EV adoption. In 2013, China strategically encouraged Tesla to build production facilities in the country, which forced local companies to innovate and compete with the electric vehicle giant. This move had a positive impact on BYD, a Chinese automobile manufacturer that specializes in electric vehicles and rechargeable batteries, spurring them to ramp up their output and potentially carry out more sales of EVs than Tesla this year.
Singapore
In addition to China, Singapore has outlined an aggressive roadmap to electrify its entire vehicle population by 2040. New diesel cars and taxis can no longer be registered from 2025, as only vehicles of cleaner energy models — such as electric, hybrid, or hydrogen fuel cell cars — will be accepted. To facilitate this transition, the government has been ramping up the installation of EV charging points in both public carparks and private premises.
However, the current infrastructure in these carparks is unable to support an increase in electrical demand, and this necessitates extensive and costly electrical grid upgrades in public carparks. The Land Transport Authority of Singapore (LTA) recently issued a Call for Solutions to find alternative methods to install these chargers.
Companies are attempting to solve this problem too, including Virta, a Finland-based EV charging platform. After raising EUR 85 million (USD 93 million), Virta aims to expand its smart charging capabilities across Asia Pacific (APAC) and Europe by 2025. Being headquartered in Singapore, the company is looking to expand to Malaysia, Indonesia and Vietnam in the next 24 months.
To address the cost concern of purchasing an EV, Singapore has provided tax incentives — some ending on December 31, 2023 — to narrow the upfront costs between an electric and ICE vehicle.
Vietnam
The country has laid out three goals to achieve by 2050, including developing the charging infrastructure across the country, preventing the use of fossil-fueled vehicles domestically, and requiring all motorized vehicles to be powered by electric energy. The adoption of EVs in Vietnam is driven by VinFast, the leading EV manufacturer in the country.
Vietnam faces the challenge of becoming a fully electric nation due to the limitations of its national electricity grid. The country is still heavily reliant on coal as its main energy source, which has led to power shortages in the past due to tight coal supplies. Transitioning to EVs would increase the demand for electricity even more, which could take a toll on the nation’s electrical supply.
While the efforts by these countries are commendable, more could still be done to boost the adoption of EVs in the region. Coupled with the improvements in infrastructure, education plays a key role in informing drivers about both the economic and environmental benefits of owning an EV. In particular, helping drivers to understand the long-term cost savings could make them realize that EVs are a more viable mode of transportation.
While Western countries and China may dominate the electric four-wheeler market, other countries in Asia are finding their niche in producing electric two-wheelers. More than 50 startups focused on electric bikes and motorcycles have been founded in the region, and governments could provide greater support for them. The issuance of grants to these startups for research and development, upskilling talent, and manufacturing could encourage greater innovation in this sector.
Our roads were built to accommodate ICE vehicles, and the current infrastructure is unable to support an all-EV vehicle population. There needs to be a radical shift in how transportation is perceived, and a joint collaboration between every stakeholder — the government, private sector, and consumers — must be achieved to make driving an EV the norm.
