Supercharging electric mobility in S-E Asia

DESPITE the negative impact of the Covid-19 pandemic on global automotive sales volumes, the electrification of mobility phenomenon continues to steadily diffuse across the globe.

The uptake of electric vehicles (EV) has been met with varying degrees of success and resilience in different markets. Within South-east Asia, industry players are refocusing their portfolios and realigning their businesses to prepare for the growth and expansion of the EV segment as policymakers introduce more EV incentives in response to sustainability concerns and industry development priorities.

In Singapore, the government has highlighted in Budget 2021 that it will allocate S$30 million over the next five years for EV-related initiatives, including measures to improve charging provision on private premises. Along with it, the minimum S$5,000 additional registration fee for electric cars will be removed to allow consumers to make full use of tax rebates of up to S$45,000.

These intervention policies signify the need to address key consumer adoption barriers identified by Deloitte's 2021 Global Automotive Consumer Study where 34 per cent of Singaporeans surveyed expressed concerns about the lack of charging infrastructure and 20 per cent felt that the price premium is a deterrent to owning an EV.

With 2021 looking to be a pivotal year for the adoption of EVs in regional markets, we examine the key success factors needed to develop a vibrant and thriving EV ecosystem. In our 2021 report on Supercharging electric mobility in South-east Asia, we look at mobility markets in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam to examine each country's conduciveness, use case deployment maturities, and EV value chain readiness - how stakeholders can best collaborate and play an active role in achieving collective objectives as an ecosystem. We identified five key success factors for electrification.

1. Total cost of ownership

The total cost of ownership (TCO) acts as the most relevant financial indicator that helps both private users and fleet operators determine the costs involved for EV deployment. The TCO analysis considers a range of related expenses including tax, electricity cost, and vehicle price, all of which are key levers for financial adoption incentives.

There is a need for new financing instruments to offset the high purchase and low resale values that are disproportionately driving TCO. Commercial fleet use cases are more TCO-competitive due to higher vehicle utilisation.

2. Battery range and life

Range anxiety, or the fear of running out of power before the next recharge, can be quelled through increased consumer education and ownership experience.

After range anxiety, the longevity of batteries is next in line as one of the most common concerns for EV transition across private and commercial fleet vehicles. The evolution of high-density batteries and fast charging technology could revolutionise new operating models for fleet operations.

3. Charging network

Accessibility and interoperability of charging networks are key drivers for EV demand. This is also the largest concern for consumers, governments and public utilities. Demand-optimised charging location prioritisation for public charging, and the introduction of digital solutions and load shifting incentives for consumers can increase the return on investments for infrastructure players.

4. Regulatory environment

Having a good regulatory environment is a boon towards the industrialisation of the EV sector - a prerequisite for both financial and operational (usage) validity of electric mobility. There is a need for countries to tackle the lack of clear policy frameworks and fragmented governance structures, while providing usage incentives beyond financial stimulus to drive adoption.

5. Value chain potential

Established value chains drive economic development and job creation, and is a significant contributing factor to a country's competitiveness. Countries should prioritise value chain stages with existing capabilities from adjacent sectors such as raw material sourcing, manufacturing, and research & development (R&D), while providing a differentiated mix of push-pull incentives for localisation.

ACCELERATING ELECTRIFICATION

Despite South-east Asia countries having unique differences, we have four general recommendations for the acceleration of electric mobility adoption that can apply across the board:

• Leverage economies of scale via fleet electrification: In the region, fleet use cases such as ride hailing, logistics and public transport have an annual kilometres travelled of about 450 per cent that of private-use vehicles, thus having a positive impact on the TCO. With smart charging schedule optimisation, the downtime of electric fleets can be significantly reduced, and utilisation of charging stations can be increased with positive impact on the return on investment of an electrification strategy.
• Rethink traditional business models: New financing structures and ownership models are key to driving EV adoption, addressing issues of high upfront vehicle cost, low residual values, uncertain hidden cost and lack of experience with EV usage.
• Incentivise usage, not solely the purchase: Usage incentives can help to improve TCO by increasing the vehicle usage and therefore add to the advantage of lower running costs for EVs. In addition, this serves to improve the convenience for private usage and effectiveness for commercial deployments.
• Increase data standardisation: Governments should encourage greater transparency among charging network providers through data standardisation, including communication and payment protocols. By developing an open data platform, EV network providers can optimise the locations of their charging stations to both serve a larger customer base and increase charging pillar utilisation.

ELECTRIFYING SOUTH-EAST ASIA

The future of electromobility has arrived at our doorstep but how will the switch to EVs across various mobility use cases happen? Markets in South-east Asia can learn from the more advanced developments in first-mover markets like China and the Nordics, while building out their unique approach to electrifying mobility based on local customer requirements, natural resource availability, mobility industrialisation progress and value chain potential.

With the ongoing transition, industry players will need to adopt an ecosystem view as they evaluate the development of new solutions from R&D to financing to ownership experience emerging in the South-east Asian landscape.

The need for unlearning traditional approaches and collaboration in this context will continue to accelerate, as traditional industry lines blur as the region moves from a vertically integrated automotive industry towards a multifaceted mobility landscape.

• Andrey Berdichevskiy and Gan Chin Wei are leader and manager respectively of the Deloitte Global Future of Mobility Solution Centre in Singapore.