EV Growth Gains Momentum in Southeast Asia

Southeast Asia has a growing emissions problem from its transportation sector. It accounts for nearly 40% of global greenhouse gas (GHG) emissions and some 23% of carbon emissions. These are staggering numbers, given that the total population of the 10-member Association of Southeast Asian Nations (ASEAN) bloc consists of only around 633 million people.

The transport sector also has the second-highest total final energy consumption share in the ASEAN region. Congestion, road safety and air pollution from transportation are responsible for some 7 million premature deaths in the region globally.

If considered as a single entity, ASEAN is the third-largest economy in Asia and the fifth-largest in the world after the US, China, Japan and Germany.

EV Adoption

BloombergNEF forecasts about 13.6 million new EV deliveries globally in 2023, up from more than 10 million global EV sales in 2022.

The US, European Union (EU) and China have been accelerating electric vehicle (EV) sales to help lower emissions from their respective transportation sectors. Southeast Asia, for its part, has been lagging.

Much of this is attributed to sparse governmental policy, a lack of public EV infrastructure, low investment levels, high costs of ownership, driving range worries, power supply reliability and weak consumer interest.

However, all of that is changing.

Governmental Policy Support

Governmental policy-makers in the Southeast Asia region are putting in place wide-ranging incentives to push EV adoption as part of climate commitments. They also hope to attract investment in vehicle assembly and EV parts manufacturing.

Indonesia, the region’s largest economy and its heaviest GHG emitter, has earmarked selling only EVs and electric motorcycles by 2050. The government is also offering fiscal and non-fiscal incentives to domestic EV automakers and battery manufacturers. This includes various tax advantages for EV importers. Indonesia is also gearing up for EV battery development.

Brunei has set a target that EVs will make up 60% of total annual vehicle sales by 2035.

Thailand, ASEAN’s second-largest economy, is making a growing number of EV models tax-exempt. It’s also setting targets for domestic EV battery manufacturing.

Malaysia has pledged to set up 10,000 EV charging stations by 2025. It’s also setting its sights on manufacturing EV components, including batteries, battery management systems and electric motors. Legacy EV maker Tesla will also soon be making its debut in the country.

Cambodia, the Philippines and Singapore are offering different types of incentives to accelerate EV development and attract investments. The Philippines is also keen on establishing its own EV battery manufacturing industry.

Vietnam, for its part, has been slower to adopt policy changes to advance its EV sector. However, Vietnamese EV manufacturer VinFast has become the largest EV seller in the Southeast Asia region.

VinFast has the capacity to build 950,000 EVs annually. It’s also currently expanding sales and manufacturing overseas, including to the US and EU.

Electric Vehicles Concerns

Most EV proponents maintain that replacing gas-fueled vehicles with EVs is one of the best alternatives to reduce harmful GHG emissions in the climate change fight.

As promising as EVs are, concerns remain.

Indeed, EV usage doesn’t directly produce GHG emissions. However, in Southeast Asia, the electricity needed to charge EVs is still largely produced from fossil fuels. Even worse, there are plans to increase the region’s LNG usage for power production.

Complicating the problem even more, ASEAN is projected to become a natural gas net importer by 2025 and a coal net importer by 2039.

However, ASEAN governments need to do more to reduce and eliminate fossil fuel-based power production.

Electric Vehicle Battery Manufacturing Emissions 

Manufacturing EVs and, in particular, creating their large lithium-ion batteries in so-called gigafactories on a large scale is energy intensive.

On average, EV production is 30% to 40% more emissions-intensive than traditional gas-fueled cars. Much of the extra emissions come from battery manufacturing.

Moreover, most lithium needed for EV batteries is extracted from hard rock mines or underground brine reservoirs. Most of the energy used to extract and process it comes from CO2-emitting fossil fuels. In rock mining, 15 tonnes of CO2 is emitted into the air for every tonne of mined lithium.

Most of these raw materials and rare earth metals are concentrated in and extracted from a few developing countries with dismal human rights records, child labour violations and other concerns.

Do EVs Have a Future?

Even with these major hurdles to overcome, a Massachusetts Institute of Technology (MIT) climate report finds that during their driving lifetimes, EVs will still create fewer carbon emissions than gas-fueled vehicles under nearly all conditions.

“We shouldn’t claim victory that with this switch to electric cars, problem solved, we are going to have zero emissions,” says the report. “No, that’s not the case. But electric cars are actually much, much better in terms of the impact on the climate in comparison to internal combustion vehicles. And in time, that comparative advantage of electric cars is going to grow.”

As such, EV growth still offers a promising way for ASEAN states to battle and reduce the region’s GHG emissions.