Jakarta –
Around the world, electric vehicles are seen as a key sector for economic decarbonization and an opportunity to reduce dependence on imported fossil fuels. That’s why the electric vehicle market is booming everywhere, said Rahul Gupta, a senior consultant at McKinsey & Company in Singapore.
This assumption refers to the two largest electric vehicle markets in the world, namely Europe and China, which respectively control 20 percent and 25 percent of the global market share. As for Southeast Asia, the share of electric vehicles will only reach two percent in 2022.
It is the scarcity of recharging networks, the lack of tax breaks and subsidies for manufacturers and consumers, which are considered to be slowing down the penetration of the electric vehicle market in Southeast Asia, analysts said. However, the delay is now being ramped up in Indonesia, Thailand and the Philippines, by offering incentives in the form of tax breaks and subsidies.
Unlike the transition to electric mobility in China or Europe which is dominated by four-wheeled vehicles, in Southeast Asia, about 80 percent of the vehicles used are two- and three-wheeled, according to Benedict Eijbergen, transportation analyst at the World Bank. This means that two-wheeled electric vehicles will be more easily accepted in Southeast Asia. In Vietnam, for example, the market share for electric motorbikes will reach 8 percent in 2020, said Eijbergen.
Tax subsidies and incentives
Rahul Gupta of McKinsey believes electric vehicle technology is not yet affordable for most, especially when compared to internal combustion (ICE) technology. To overcome this, the government is encouraged to offer subsidies for prime consumers or tax breaks for producers.
This policy was adopted by the government in Thailand with tax cuts and subsidies. The Indonesian government is still discussing reducing the electric vehicle tax from 11 percent to only 1 percent.
Complete refill infrastructure is also required to attract consumer interest. The government is also urged to speed up the electrification of vehicles by setting a deadline for selling fossil-fuel vehicles.
Gregory Polling, Asia Director at Strategic and International Studies (CSIS), acknowledged the strong ambition of Southeast Asian countries to cut emissions through electric mobility. Unfortunately, the implementation still varies in each country. This is especially true for Indonesia, which will find it difficult to push for infrastructure expansion due to its geographical condition of the islands.
The climate crisis is not driving electric mobility
“After all, electric vehicles are still a luxury item for many regions in Southeast Asia, rather than globally,” he said.
Moreover, it is believed that the climate crisis will not be a factor that encourages consumers to switch to electric vehicles. “Most of these countries still think they did not create this problem,” said Poling. According to him, this attitude is understandable.
“Western countries created this problem, so why should Southeast Asia slow down economic growth to switch to renewable energy or electric vehicles.”
Weak climate awareness in the expansion of electric vehicles is feared to encourage environmental damage.
“Southeast Asian countries will try to attract multinational companies, and as a result will not pay much attention to the principle of sustainability in mining or throughout the production cycle,” he said, without referring to Indonesia, which in the last three years, has signed at least a dozen agreements with investment values. around USD 15 billion for the production of batteries and electric vehicles in the country.
rzn/hp (reuters)
See also ‘5 Brands of Motor-Electric Cars that Get Subsidies’:
(it/it)
