Start-ups Turn EV Niches into Opportunities in Southeast Asia
As the world shifts to electric vehicles (EVs) to reduce climate change and increase efficiency, global automobile companies setting up EV automobile factories in key markets in Southeast Asia. Start-ups are taking a different path, however, and using a different approach to open up new avenues for potential success with EVs.
Southeast Asia Shifts to EVS with Global Players
In every country in Southeast Asia, there are plenty of cars and motorbikes. While it might seem that most of those vehicles are imported, and many are, ISEAS said Southeast Asia is actually the seventh largest automotive manufacturing hub worldwide and produced a total of 3.5 million vehicles in 2021. Thailand is the largest car producer, producing over 1.6 million motor vehicles, followed by Indonesia, Malaysia and Vietnam
After producing fossil fuel-powered cars for decades, manufacturers in Southeast Asia are now seeking to become major manufacturers of EVs and to develop EV ecosystems. Mordor Intelligence estimated the ASEAN EV market at nearly $500 million in 2021 and forecasts that it will grow to $2.7 billion by 2027. Analytics firm Counterpoint said Vingroup in Vietnam led Southeast Asia’s EV sales in 2022, closely followed by Wuling (part of the SAIC-GM-Wuling group) and Volvo (a Geely subsidiary). The numbers reinforce how Southeast Asia is becoming attractive for Chinese auto manufacturers looking to expand abroad.
Reinforcing the importance of EVs to the region, Association of Southeast Asian Nations (ASEAN) leaders delivered their first-ever declaration on developing a regional EV ecosystem at their Summit in May 2022. They encouraged the harmonization of regional standards for the EV ecosystem to ensure interoperability and facilitate cross-border trade.
To grow the EV sector, CSIS said, Southeast Asian countries are taking steps to establish domestic industries to support the ecosystem with manufacturing facilities, materials that support the supply chain and economic policies to facilitate domestic adoption. And although there is a regionwide consensus, each country is still pursuing its own goals.
Indonesia and Thailand are both racing to become EV manufacturing hubs, Singapore’s Business Times opined. Thailand has the strongest footprint in automobile manufacturing in Southeast Asia and the Thai government approved an incentive package to promote the production of electric vehicles, VietnamNet noted, targeting EVs to reach 30 percent of car production by 2030. Chinese brands in particular are heading to Thailand, with Great Wall, SAIC, Chery, Dongfeng, Geely and Changan planning to manufacture EVs there. In Indonesia, the government issued an EV Roadmap with incentives to attract investment in the EV industry, leading Chinese companies to head to Indonesia too. Malaysia attracted investment in EV manufacturing from Chinese firms, with Malaysia's Fieldman and China's Changan Automobile planning to build an EV factory jointly and Proton partnering with Smart Motors to produce EVs. In Vietnam, CSIS said, Vinfast has the capacity to build around 950,000 EVs annually, is rapidly expanding abroad. Singapore is concentrating on the higher end of the value, with Hyundai Motor establishing a research and development (R&D) centre and small-scale production facility, and Nio also opening an R&D centre for artificial intelligence and autonomous driving.
Along with manufacturing, CSIS noted that Southeast Asian countries are supporting domestic industries across the EV supply chain. Although nearly 75 percent of all lithium-ion batteries and 50 percent of battery refining materials currently come from China, Indonesia is well-positioned to become a centre of battery production because it has the world’s largest deposits of nickel, tin, and copper. An LG Energy Solution-led group may invest US$9 billion project, and CATL is investing at least US$6 billion in a battery project. Malaysia’s Hong Seng Consolidated and EoCel are partnering develop a regional EV battery manufacturing hub in Malaysia. Vietnam has vast reserves of nickel too, and Vinfast constructed a facility in 2021 to produce EV batteries.
Along with cars and batteries, charging stations and battery swapping infrastructure are under development to reduce range anxiety. Malaysia plans to have 10,000 EV charging stations by 2025, for example, while Malaysia and Thailand also plan to initiate a battery-swapping network for e-bikes and Swap is available for e-motorcycle riders in Indonesia.
Where Start-ups can Compete
With global giants from China and Korea as well as other markets swooping in and with governments regulating the EV ecosystem, it might seem that there would be little room for start-ups. However, start-ups with a strategic focus on specific niches are growing their business in key markets.
While setting up an automobile factory would require competing against giant global and regional players, another huge opportunity is in electric motorbikes. Start-ups across the region are setting up manufacturing to support domestic and international sales of electric motorcycles, tapping into a global market that Research and Markets expects to grow from US$4.9 billion in 2023 to US$14.7 billion by 2028.
In Vietnam, for instance, Dat Bike is an electric motorbike manufacturer founded in 2019 that aims to combat pollution by shifting riders from gasoline-powered motorbikes to electric ones. It aims to lower costs, improve efficiency and “greenify” the transportation ecosystem” by converting people from traditional vehicles to EVs across the globe.
Treeletik says it is the first Malaysian company to manufacture a fully electric bike locally, pioneering innovative EV technologies for Malaysia and beyond. It says its eco-friendly vehicles are cleaner, safer, more advanced, affordable and need minimal maintenance.
In Indonesia, Viar manufactures electric motorcycles and scooters, with models tailored to meet needs ranging from urban commuting to three-wheelers for delivery services.
Another take on the market is shared mobility. Singapore-based Neuron Mobility, for instance, is a shared e-scooter and e-bike operator that has raised tens of millions of dollars. The company has grown from operations in seven cities in 2020 to 26 in cities in Canada, Australia, the UK and South Korea.
Yet another sector is battery swapping. Taiwan-headquartered Gogoro has more than 500,000 active monthly users and ha 260 swaps on its network every minute, according to the The Japan Times, plus pilot programs in Indonesia, the Philippines and India. In Singapore, MO Batteries offers a local swapping pilot program and plans to enter Malaysia as well as to partner with DHL in Vietnam.
Opportunities for Start-ups
These start-ups and many others are clearly working hard to turn their visions into reality and tackle multi-billion-dollar EV markets. By focusing on niches where they can gain competitive advantages, they likely have an opportunity to succeed that would be far harder in the more traditional automobile market
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