Visitors look at an electric vehicle at the Bangkok EV Expo. The event was held at the Queen Sirikit National Convention Center (QSNCC) in Bangkok from 16 to 19 February 2023. (Photo: Varuth Hirunyatheb)
KUALA LUMPUR: For self-confessed tech geek and adrenaline junkie Farhan Abdul Rahim, becoming one of the first Malaysians to own an electric car in 2020 was a no-brainer, but it didn’t stop there.
Last June, Farhan embarked on a three-day journey across the Malay Peninsula in his Tesla – covering around 1,700 kilometers – in an attempt to demonstrate that electric vehicles (EVs) can work beyond the cities and into rural areas of the Southeast Asian nation.
However, as a manager at state oil company Petronas and someone who helped the company consider setting up electric vehicle charging stations during the coronavirus lockdowns in 2021, Farhan was well aware of the challenges facing this journey.
“It’s the first time I’ve ever done this (trip) in an EV,” said the 46-year-old, who spent weeks planning what electric vehicle charging options he would have before leaving on the trip.
Farhan said he first became interested in electric vehicles in 2017 after attending a work conference that had a booth promoting the vehicles and had a Tesla on display.
“(The trip) was about breaking the myth and helping the electric vehicle community, that they say you can’t go to the eastern part of Malaysia with an electric vehicle,” he said in an interview, referring to the lack of of cargo infrastructure is often cited as being seen as an obstacle to the growth of the sector in Malaysia.
Production and sales of electric vehicles are increasing globally, and the sector is seen as key to curbing climate change by reducing petrol and diesel emissions, reducing oil imports and fuel subsidies and supporting investment in renewable energy sources.
According to Rahul Gupta, associate partner at McKinsey & Company in Singapore, more climate-conscious drivers around the world are going green, with electric and hybrid vehicles accounting for 18% of global four-wheeler sales last year .
But that adoption occurred mostly in the United States, Europe and China, with the latter two markets accounting for about 20 percent and 25 percent of sales, respectively, he said.
In South Asia, electric vehicles accounted for less than 2% of sales by 2022, he explained.
A lack of charging infrastructure outside urban centers, a lack of tax incentives and subsidies for both automakers and buyers, and slow progress in developing affordable electric vehicles among major manufacturers, analysts say of Southeast Asia have slowed down the region.
But governments appear poised to pick up the pace, offering increasing incentives to car and battery makers, tax breaks for buyers and setting ambitious targets as they seek to position themselves as electric vehicle manufacturing hubs for the region.
For Farhan, a trip that was initially to demonstrate the capabilities of electric vehicles in Malaysia had unexpected benefits.
“I actually got to appreciate the landscape and scenery during the trip,” said Farhan, who traveled with his wife and two children, recalling how the family enjoyed views of vast mountain ranges, lush rainforests and beaches virgins
– Luxury item? –
Two- and three-wheeled vehicles, from motorbikes to tuk-tuks, make up about 80% of vehicles on the road in Southeast Asia, according to Benedict Eijbergen, director of the transport practice for East Asia and the Pacific at the World Bank.
That means the transition to electric vehicles in the region will be very different from that in China, Europe and the United States, where EV growth is driven by the electrification of cars, he said.
Adoption of electric two-wheelers has been greater in the region than electric cars, accounting for about 8 percent of all vehicle sales in market leader Vietnam in 2020, Eijbergen added.
However, McKinsey & Company’s Gupta said the higher cost of buying an electric vehicle compared to an internal combustion engine (ICE) vehicle prevented many drivers from making the switch.
To address this, governments need to introduce point-of-purchase subsidies to help buyers and provide incentives or tax breaks to automakers to reduce production costs, Gupta said.
A model presents an electric vehicle charging station at Motor Expo 2022. (Photo: Pattarapong Chatpattarasill)
Last year, Thailand approved a package of incentives including tax cuts and subsidies to promote electric vehicles, while earlier this month Indonesia said it was looking to reduce value-added tax on electric car sales to 1% from 11%.
More charging infrastructure and greater availability and choice of electric vehicles would also help increase appetite for such vehicles in the region, as would governments set deadlines for banning petrol and diesel vehicles, Gupta added.
While many Southeast Asian nations have ambitious net-zero plans, including support for electric vehicle purchases, rebates and charging infrastructure, implementation is very uneven, said Gregory Poling, director of the South- East Asia from the US Center for Strategic and International Studies. (CSIS).
As in many parts of the world, the lack of charging stations outside cities is a problem, with expansion into countries like Indonesia, an archipelago of thousands of islands, likely to be a challenge, he added.
“Electric vehicles remain a luxury item for the most part in Southeast Asia, as they are globally,” Poling said.
– Weather is not a concern –
Greater adoption of electric vehicles in Southeast Asian nations would help meet international climate goals and help them attract companies looking to invest in countries joining the global decarbonization drive, Poling said.
In the coming years, Poling predicted, Southeast Asian countries will seek to position themselves as regional centers for electric vehicle manufacturing. Ample nickel reserves in Indonesia and the Philippines could play a role in making the necessary batteries.
However, slowing climate change is unlikely to be the driving force behind EV growth in most of the region.
“Most of these countries, understandably, still rightly believe they didn’t create this problem,” Poling said.
“The West created this problem, so why should they have to reduce economic growth, if that’s what it takes, in the name of switching to green electricity generation and electric vehicles?”
Electric vehicles from Greaves Cotton Ltd are displayed during the media day of the 2023 Auto Expo in Noida, Utter Pradesh, India on January 11, 2023. (Photo: Bloomberg)
Abhilash Gupta, an automotive analyst at research firm Counterpoint, noted that electric vehicle battery production is unlikely to be carbon neutral, and that increased mining and manufacturing could bring environmental risks and humans
“(Southeast Asian) nations are rushing to attract more multinational corporations and therefore are not focusing adequately on sustainable practices in the mining and production cycle,” he said.
Indonesia has signed at least a dozen deals in the past three years, worth more than $15 billion, for the production of batteries and electric vehicles in the country, while President Joko Widodo has tried to convince Tesla CEO , Elon Musk, to invest.
– Chicken and egg situation –
For Malaysia’s Farhan, working at the iconic Petronas Towers in Kuala Lumpur gives him access to underground parking and about 50 charging points, the largest single concentration of electric vehicle charging stations in the region, he says.
But switching to electric vehicles is more difficult for the general public, especially when many condominiums refuse to install charging points or even allow owners to do so on their own, he said.
Many car dealers also aren’t trained well enough to promote electric vehicles or offer basic advice to potential electric vehicle owners, he added.
However, Farhan believes the government’s bigger tax incentives are helping. Malaysia has import tax and excise duty exemptions for electric vehicles and the new government is expected to announce more financial incentives in its 2023 budget this week.
Farhan, a member of the Electric Vehicle Owners Club of Malaysia, said there are now about 2,400 electric vehicles registered in the country, about 240 by early 2021.
He urged the government to set aggressive electric vehicle targets and establish a single body to lead the country’s electric vehicle charge, but acknowledged the big picture was complex.
“It’s a sensitive thing because Malaysia is a net oil producer,” he said. “It’s a chicken-and-egg situation.”
“(But) I will not buy petrol. From now on it will be electric vehicles”, he added.
