EV sales rising in APAC: Asia is plugging into the future

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  Quantumrun Foresight
• May 20, 2024

Insight summary

Asia's electric vehicle (EV) scene is rapidly changing, with China taking the lead in adoption rates. However, emerging economies are grappling with challenges, including lower adoption rates and infrastructural hurdles, yet promising substantial growth. This landscape suggests a dynamic shift in consumer behavior towards sustainability and the need for strong infrastructural development, hinting at a future where Asia could play a pivotal role in the global transition to electric mobility.

EV sales rising in APAC context

According to consultancy firm McKinsey, the EV landscape in the Asia-Pacific (APAC) region is witnessing rapid advancements in EV adoption, with China leading the charge as the largest EV market. By 2030, China's EV adoption rate is expected to reach 60 percent, representing more than 40 percent of total new EVs sold globally. This growth is supported by comprehensive policy frameworks, such as the EU's Fit for 55 plan and the Biden administration's target for half of new vehicles sold in the US in 2030 to be electric.

In contrast to the strong growth in mature markets, emerging Asian economies face unique challenges in scaling up their EV ecosystems. The adoption rates in India and the Association of Southeast Asian Nations (ASEAN) are still low, with EVs constituting 5 percent of total vehicle sales between October 2022 and September 2023 in India, according to consultancy firm Bain & Company. However, there are signs of positive momentum, with significant growth projected in electric two-wheelers (E2Ws) and four-wheelers (E4Ws) production. For instance, India has emerged as the largest market for E2Ws, overtaking China, and is expected to become the second-largest E2W market in the world by 2030, based on McKinsey’s forecasts.

Addressing the barriers to EV adoption in emerging Asia requires a multifaceted approach, focusing on achieving parity in total cost of ownership, enhancing supply chain readiness, and expanding charging infrastructure. Despite these challenges, the potential for growth in the EV market is immense, with forecasts suggesting that ASEAN markets collectively will require an estimated 95,000 public AC and 40,000 DC charging points by 2030 to support the anticipated volume of EVs. This expansion represents a significant opportunity for stakeholders across the value chain, from automotive manufacturers to technology providers and governments.

Disruptive impact

Electric vehicle owners can anticipate direct financial benefits over the long term, primarily through reduced operating costs. These vehicles are cheaper to run than their internal combustion engine counterparts due to lower fuel (electricity) costs and reduced maintenance requirements. The electric powertrain of an EV has fewer moving parts than a conventional gasoline engine, which translates to fewer wear-and-tear components and potentially lower repair costs.

To stay relevant in a changing market landscape, companies within the automotive supply chain may need to pivot towards EV-specific components and services, such as batteries, electric motors, and charging solutions. This shift will likely spur innovation in related sectors, including renewable energy and smart infrastructure, creating new revenue streams and competitive advantages for forward-thinking firms. Additionally, the growth in EVs demands enhanced customer education and engagement strategies to navigate the transition, underscoring the importance of adaptability and strategic planning in capturing market share and driving consumer adoption.

Meanwhile, investment in charging infrastructure is critical to addressing range anxiety and facilitating the widespread use of EVs. Policies promoting local manufacturing of EVs and components can drive economic growth and job creation while also reducing dependency on imported oil, enhancing energy security. Furthermore, governments may need to balance incentives for EV adoption with the development of regulations and standards for battery recycling and energy efficiency, ensuring that the shift towards electric mobility contributes to broader sustainability and policy goals. 

Implications of EV sales rising in APAC

Wider implications of EV sales rising in APAC may include: 

• Increased demand for renewable energy sources, as countries enhance their electric grid capabilities to support the growing number of EVs.
• The rise of local EV manufacturing hubs in Asia, boosting economic growth and creating new job opportunities in the green technology sector.
• Development of new business models around EV charging infrastructure, such as subscription services and charge-on-the-go solutions.
• Changes in urban planning and infrastructure development to accommodate EVs, including more charging stations in public and residential areas.
• Enhanced energy security for Asian countries by reducing oil imports and increasing the use of domestic renewable energy sources.
• The automotive workforce needing to acquire new skills related to electric powertrains and battery maintenance.
• Political shifts as countries and regions vie for leadership in the EV market, influencing global trade and technology transfer agreements.

Questions to consider

• How will the rise in EV sales in Asia shape the future of public transportation in densely populated cities?
• How could the expansion of EV infrastructure influence the layout and design of your community?