OPINION-EDITORIAL | Don’t rush on EV in ASEAN
People walk past parked Group of 20 Summit official electric vehicles (EVs) in Nusa Dua, Bali, on Nov. 12, 2022. (AFP/Bay Ismoyo)
Editorial board (The Jakarta Post)
Jakarta ● Tue, May 23, 2023
It may seem hard to be hopeful about ASEAN these days. With ongoing conflicts in Myanmar and tensions in the South China Sea, it is reasonable to question the regional bloc’s relevance in maintaining peace and stability in Southeast Asia.
Notwithstanding the political and security tensions, there is still much to celebrate. Although it is often overlooked, most of the countries in ASEAN have recovered from the COVID-19 pandemic and its subsequent global recession. They have also withstood small impacts from global food and energy crisis caused by the Ukraine War, as the countries rely on intra-regional trade and relations with China and other Asian countries to fulfill domestic demand.
When the group’s summit in Labuan Bajo, East Nusa Tenggara, produced a declaration to support member countries to adopt electric vehicles (EV) and build its industries, many were skeptical and considered it another empty pledge made by the bloc. Given the relatively less-developed automotive industry and EV battery manufacturing in the region, there is indeed ample room for doubt.
Memento Maxima Digital MarketingBut there is also potential.
Unlike the industry for internal-combustion engine vehicles, the EV ecosystem tends to be more segmented and close-looped. Critical minerals like nickel, tin and copper that are used to produce the batteries that power up EV are available only in certain countries, fewer than those which have oil deposits. Sustainable production is only possible if auto manufacturers include these countries in their supply chain.
ASEAN countries with large deposits of minerals like Indonesia and Vietnam are building their EV battery industries, albeit still at the development stage. In Indonesia, South Korea’s LG and Hyundai are operating an EV battery plant, which is expected to start producing in 2024. Vietnam’s conglomerate Vinfast has also began construction of a facility to produce batteries for sale and its own EV production.
There are also large vehicle manufacturing industries in the region. According to a study by ISEAS-Yusof Ishak Institute, Thailand is the biggest car manufacturer in Southeast Asia, producing over 1.6 million vehicles in 2021. Indonesia and Malaysia follow with 1.1 million and 0.48 million units respectively.
There are opportunities to develop EV and battery technology among ASEAN countries. And with the different strengths possessed by each country, the bloc can complement to create a sustainable supply chain for EV production.
The member countries’ strengths in production may outweigh their own capabilities for EV adoption.
While governments have offered incentives and subsidies, the high costs of electric cars and motorcycles will still become barriers for adoption in the bloc, which mostly consist of middle- and low-income countries.
The motorization ratio, a number of registered vehicles per 1,000 people, is still relatively low in the countries, according to the institute’s study. Malaysia and Thailand had 993.7 units and 608.7 units in 2020, respectively. Indonesia is far lower with 485 units.
Only if the countries can consistently maintain their economic growth will their people have sufficient purchasing power to own EVs.
Supporting infrastructure for EV maintenance, such as charging points and other vehicle spare parts are still largely lacking. In Indonesia, there are only 439 charging stations available as of December last year.
On top of the problem, electricity in ASEAN countries still largely relies on fossil fuels, meaning EV adoption will not be truly green in the region. The International Energy Agency (IEA) recorded in 2019 more than 60 percent of Indonesia’s electricity was still powered by coal while Singapore and Thailand were mostly fired by natural gas at 96 percent and 60 percent respectively.
EV is the inevitable revolution in the global motor industry of the moment. For Southeast Asian countries, however, there is a lot to solve before it is possible to make the region a global EV hub. In the ASEAN framework, governments can exchange experience and ideas on the right policy framework to build the ecosystem. But it is not necessary for any country to punch above its weight.
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