Home » Electric vehicle market in Asia, to thrive in the next few years
The electric vehicle (EV) market in Asia is growing as governments push for more sustainable transportation options in automobile supply chain. This push for EVs aligns with global sustainability efforts to reduce dependence on fossil fuels and promote a cleaner environment at the midst of escalating climate change.
Subsidies, tax breaks, implementing zero-emission mandates, and investing in EV electric vehicle ecosystems have aided to possible market growth. According to Statista’s Mobility Market Outlook, the Asia Pacific EV market can grow around USD 207 billion by 2023,
This growth is in line with the global trend as the report by SCM Globe suggests. Electric car sales worldwide rose by more than 40% in 2020 compared to the previous year. Prior, the market was valued at $229 billion in 2021. There is expected growth to USD 777 billion by 2027.
Manufacturers of EVs
A key player in the EV market is China, which accounts for 60% of global EV exports. Notably, based on Industrial Guide Asia‘s round-up, many leading EV manufacturers are situated in the said country
Meanwhile, Thailand is emerging as a major hub for the production of EV. Prominent Asian brands such as Toyota, Nissan, and Honda operate in the country. Its distance to Indonesia, a nickel producer for EV batteries, also aids to its growth in the industry.
The Asian EV market is being boost by various policies and incentives. These are tax cuts, subsidies, and other forms of financial support.
Policies help usher the production and usage of EVs in markets across Asia. Countries such as India and Vietnam have particularly gained from these policies.
With the growing popularity of EVs, many newcomers to the industry are also investing in this technology. One such company is Foxconn, Apple’s largest supplier. Foxconn announced its plan to build an electric vehicle factory in Thailand by 2024. The target annual production is 150,000 EVs by 2030.
In line with this target, Foxconn and Geely Holding Group signed a strategic cooperative agreement in January 2021 to create a joint venture company that will provide OEM and consulting services for vehicles, parts, drive systems, and platforms to global automotive and ride-sharing companies.
Traditional car companies are also shifting. As EVs become more mainstream, parts suppliers of internal combustion engines, have found their businesses at risk of disruption.
For instance, Thailand’s top auto parts manufacturer, Yamaha Motor Parts, is feeling the heat. By specializing in exhaust systems for internal combustion engines, the company is at risk of losing its primary revenue source.
In a bid to stay competitive, the company is broadening its reach. It has invested in components of EVs, such as battery packs, to diversify its product portfolio.
Automobile supply chain
The Asian auto supply chain, particularly the EV market, is a vital player in the global market for electric cars. Characterized by its vertical integration, select key stakeholders control every aspect of the value chain. They manage from getting raw materials to producing finished products.
Another unique quality of the Asian auto industry is its dominance over research and development (known as R&D) of solid-state batteries, which often account for about 30-40% of the price of an electric vehicle.
The Asia Fund Managers state that the solid-state battery market will hit USD 3.4 billion by 2030, with a compound annual growth rate of 18%. Japan is the current leader in R&D for solid-state batteries. Such ushers six companies among the top 10 patent holders, including Toyota, Panasonic, and Idemitsu Kosan.
In fact, Japan claims almost 68% of solid-state battery patents, with the United States coming in second at 16%. South Korea follows closely behind at 12%. Although China falls behind in the industry, significant investments in research and development for solid-state batteries are being made. Wherein,companies like Eve Energy leading the way in producing new technologies and expanding production.
This level of control has enabled Asian producers to make electric cars at a lower cost than other regions. Moreover, Asia’s has ample reserve of raw materials for EV production, such as lithium and cobalt, which are used in batteries. Such post a challenge for other markets, including Europe and the United States, to compete in the industry.
Currently, China is the leading producer of these elements in the region. In addition, the country has taken steps to secure mineral supplies abroad while heavily subsidizing its battery manufacturers.
“There’s a lot of ground to make up. China has been several chess moves ahead for a while now,”said Francis Wedin, the CEO of Vulcan Energy, a company that produces lithium for electric vehicles in Germany.
Asia is a major hub for the production of EVs, with significant factories based in countries such as China, South Korea, Japan, and Thailand. Many Asian countries also have a large market for EVs, particularly in the exports section.
The economic impact of EVs
The EV automotive ecosystem, which includes various parts of electric cars, such as batteries, charging stations, and service providers has positively impacted the region’s economy.
According to market research did by Statista, revenue in the electric vehicle industry could reach USD 207.50 billion in 2023. It could grow at a yearly rate of 14.85%, reaching USD 361 billion in 2027.
Furthermore, the EV market unit sales can reach more than eight million vehicles in 2027. From an international outlook, the most revenue will come from China.
The development of the industry has also led to the creation of numerous jobs. It includes opportunities in the manufacturing and assembly of electric cars as well as in the automobile supply chain and service sectors.
The rising demand for electric vehicles in Asia has also fuelled investment in charging infrastructures, which are necessary for the widespread adoption of electric cars in the region.
Research and Markets estimate that in Asia-Pacific, the EV charging stations market is expected to reach $69.57 billion by 2029. It will have a compound annual growth rate of 30.8% during the forecast period of 2022 to 2029.
Support and investment are essential to achieve parity in the total cost of ownership between electric and internal combustion engine vehicles. Both aid in low-cost electric vehicle models and distribution infrastructure.
“The total cost of ownership of electric vehicles relative to internal combustion engines varies significantly amongst weaker market segments due to factors such as operating range, internal combustion alternatives, and access to charging infrastructure. These factors require new investments, which are slowed by coordination challenges impacting the economy. It’s a chicken-and-egg problem,”said Randheer Singh, Director of NITI Aayog, in an interview with CNBC.
The Asia-Pacific is experiencing a surge in the production of EVs. This is thanks to a combination of supportive policies and incentives, as well as an abundance of raw materials in the region.
Favorable trade policies that support the import and export of EV components, coupled with an independent automobile supply chain, have also played a crucial role in the market’s growth.
The vertical integration in the Asian electric vehicle supply chain has enabled manufacturers to produce electric cars at a lower cost while also providing improved efficiency, control over the production process and the ability to quickly respond to changes in market demand.
As a result, integrating EVs into the automobile supply chain in Asia may increase jobs as well as investment in charging infrastructure and battery manufacturers. However, more support and investment are essential to increase the adoption of EVs in emerging markets like India and Southeast Asia.
Such include government incentives for consumers to purchase EVs. Additionally funding for infrastructure development and investment in research, and development of EV technology.