Govt incentives key to EV demand growth in Asia — Sustainable Fitch
29 Sep 2023
Government policies and incentives will play a crucial role in supporting electric vehicle (EV) demand growth in the transition away from internal combustion engine vehicles (ICE) in Asia, said Sustainable Fitch Inc.
In a note, it said many governments in Asia are utilising a mix of policy tools, including subsidies, rebates and tax exemptions to shift consumer purchasing decisions.
“We believe regulatory trends of tighter efficiency standards and promotion of electric vehicles will boost overall EV sales in the coming years, on top of recent geopolitical oil-price volatility that shifted some demand away from ICE vehicles,” it said.
On the demand side, the company said many governments are offering tax incentives to grow both their domestic EV and related-components industries and to attract foreign direct investment (FDI) from global manufacturers for different levels of the automotive value chain.
It noted that China is the world leader in EV and EV battery production, as well as the largest processor of EV-related critical minerals, while legacy original equipment manufacturers in Japan and South Korea are attempting to gain market share under intense competition from low-cost Chinese brands.
Meanwhile, Southeast Asia has grown as a hub for automotive component manufacturing and is attracting EV-related FDI from companies around the world, it said.
Sustainable Fitch also reckoned that low penetration of EV charging points is a critical issue for wider consumer adoption in Asia, noting that battery swapping is an alternative to conventional charging points, allowing EV drivers to replace depleted batteries with fully charged ones in a few minutes at a swap station.
Malaysia, via its Low Carbon Mobility Blueprint 2021-2030, aims to have 10,000 public charging stations by 2025.