Across the ASEAN-6, the key challenges in driving EV adoption are cost, availability of charging infrastructure and EV supply chain readiness. Thailand's overall EV adoption readiness is the second highest after Singapore due to the growing awareness and market acceptance of EVs, emerging charging network and growing base for EV R&D, as well as strong government support through policies and incentives to enable infrastructure readiness.
Preecha Arunnara, EY Thailand Assurance Partner, says: "While the ASEAN-6 nations had been slow to adopt EVs, societal concerns over climate change are now driving a rapid shift in policies and consumer attitudes toward EVs. Financial incentives to improve the affordability of EVs have been widely adopted across these markets, accompanied by national programs and policies to improve sustainability and decarbonize the transport.
For now, across the ASEAN-6 markets, two- or three-wheeler vehicles are swiftest to electrify as electric cycles, scooters and motorcycles are relatively affordable and less reliant on specialist charging infrastructure. However, as consumers in the region become more affluent, the sales of electric passenger cars will look to grow in dominance."
According to the study, EV sales volume across the six Southeast Asian markets is expected to reach about 8.5 million units by 2035. Of the ASEAN-6, Thailand is expected to be the second largest by volume, with estimated annual sales volume of 2.5 million units and sales value of US$35b-US$42b by 2035 following Indonesia where 50% of EV adoption is primarily driven by electric two-wheelers (estimated sales volume of 4.5 million units and sales value of US$26b-US$30b).
Vehicle manufacturing, retailing and aftermarket; raw materials and processing; and battery production, assembly and recycling account for bulk of the value pool
The expected growth of the region's EV market looks to present opportunities for incumbents and new entrants looking to expand in Southeast Asia. Such opportunities extend across the end-to-end EV value chain, from raw materials processing to charging infrastructure and software. The six key value pools include: 1) Raw materials and processing 2) Energy production 3) Battery production, assembly and recycling 4) Vehicle manufacturing, retailing and aftermarket 5) Charging infrastructure and 6) Charging management software.
Of them, the largest opportunity is in vehicle manufacturing, retailing and aftermarket, which is expected to account for 69% of the region's total EV ecosystem value of US$80b-US$100b by 2035. Raw materials and processing, as well as battery production, assembly and recycling are expected to account for 9% and 11% of the total value, respectively.
"The ASEAN-6 markets possess strengths and core competencies that span the entire value chain. Nickel and copper - two essential metals in lithium-ion EV batteries - are available in the region in substantial quantities, which can be leveraged to accelerate EV manufacturing.
Charging infrastructure and charging management software also present an attractive opportunity for investors in the region. They are less capital intensive and have the potential to be highly profitable. Alongside the affordability of EVs, the availability and ease of use of charging stations will be crucial to winning over consumers to the EV cause. A barrier to EV adoption is the lack of charging stations. However, we are seeing incentives to support the building of more chargers in their respective markets.", Preecha adds.
Four strategies for EV market players to succeed in ASEAN-6
As the region's EV market is currently relatively nascent and underexploited, there are good opportunities for industry incumbents as well as smaller and new startups. The EY-Parthenon study highlights four factors that are also critical to players seeking to succeed in the EV value chain in ASEAN-6 should address:
- Sector experience: Companies need to consider existing capabilities, assets and relationships that could give them a leg up in a related, new EV market.
- Scalability: Companies need to leverage financial and nonfinancial resources to launch EV-related products and services, and manage rapid growth.
- Funding: Companies must address this critical factor to overcome high initial acquisition costs and low initial utilization in many parts of the emerging ASEAN-6 value chain.
- Technological advantages: This gives a competition advantage in the EV-related market, such as software or specific battery and EV component manufacturing technologies.
"Compared to the more established EV markets, ASEAN-6 can be a potentially lucrative market with high growth potential. Its many advantages, including significant reserves of key raw materials for battery production, an established capacity for car manufacturing and a favorable environment for foreign investors, are attractive to investors. However, success requires a strong understanding of the local markets, the value pools available as well as the existing operations within the value chain. Importantly it requires long-term commitment, a well-defined vision and strategy.", Preecha concludes.
Source: EY Thailand