As Southeast Asia puts its electric vehicle revolution in gear, are Musk & Co all hype?
There's no avoiding the exuberance of electric vehicle evangelists these days, and who can blame them? In the midst of all the market see-sawing during the Covid-19 pandemic, the sector has emerged as a darling of investors from Wall Street to Hong Kong and Tokyo.
Notwithstanding the recent declines, the stocks of electric vehicle (EV) makers as well as associated technology companies have roared to all-time highs over the past year.
Meanwhile, governments - keeping in mind the need to boost emission reduction targets before November's crucial UN climate change meeting COP26 - have been stepping up policy adjustments to move their consumers away from internal combustion engines (ICEs).
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Singapore, the ever-willing test bed for cutting-edge public policies and regulations, in February stepped up its EV push, with Finance Minister Heng Swee Keat announcing a sweeping set of policies that included an immediate hike in petrol duties, registration fee rebates for new EVs, and a plan to expand the number of charging stations to 28,000 by 2030 from 1,600 currently.
The republic, one of the world's key oil-refining hubs, now hopes to phase out ICEs by 2040, a goal that is within range of the more ambitious 2035 deadline set by California in the United States.
Singapore's move was the latest indication that the Southeast Asia region as a whole is on the cusp of a post-pandemic EV revolution.
"In Southeast Asia, Singapore is undoubtedly a trendsetter for adopting new regulations," Vivek Vaidya, associate partner and senior vice-president for intelligent mobility in the Asia-Pacific for Frost & Sullivan, wrote in a note soon after Heng's announcement. "I expect larger markets in Southeast Asia such as Thailand, Indonesia and Malaysia to follow suit and launch customer-friendly policies to promote electric vehicles".
Indeed, these countries have made inroads through the 2010s both in uptake of EVs and consumer interest in making the transition to more environmentally-friendly vehicles.
While EV sales in these countries number in the thousands, making up a fraction of newly registered vehicles each year, a Frost & Sullivan survey released in February on six auto markets - Malaysia, Indonesia, Vietnam, Thailand, the Philippines and Singapore - found that 55 per cent of the 3,000 respondents would "probably" consider purchasing an EV in the next three years.
Edmund Araga, president of the Electric Vehicle Association of the Philippines, said a combination of increasing government tax perks, gradually decreasing EV prices as well as the availability of electric versions of iconic Southeast Asian vehicles - such as the trike and jeepney - meant enthusiasm would continue to build. "I would say, yes, right now it is definitely ripe to be scaled up in a more profound way," Araga said.
And there's the small matter of all the EV lobbying by the ultimate tech-bro, Tesla's founder Elon Musk. Anything the electric vehicle pioneer says must be true, right? In late January, he tweeted: "Battery cell production is the fundamental rate-limiter slowing down a sustainable energy future. Very important problem."
Tesla's Elon Musk. Photo: Reuters alt=Tesla's Elon Musk. Photo: Reuters
Musk's bullishness stood in contrast to the views expressed by another auto industry titan in December.
In a year-end news conference in his capacity as chairman of the Japan Automobile Manufacturers Association, Toyota President Akio Toyoda blasted politicians for their aggressive push to get rid of ICE vehicles. In a country like Japan that gets most of its electricity from burning coal or gas, EVs don't help the environment, Toyoda was quoted as saying by The Wall Street Journal. "The more EVs we build, the worse carbon dioxide gets," he said.
So who's right on EVs, and are Asian countries such as Singapore on the right path with their EV push or are they unwittingly being led down a hype highway?
Toyota President Akio Toyoda. Photo: EPA alt=Toyota President Akio Toyoda. Photo: EPA
HYPE HIGHWAY?
Interviews with experts and recent commentaries show the consensus view is that EVs clearly provide environmental benefits.
Kaoru Natsuda, a longtime scholar of Asia's auto industry, said research showed EVs emitted fewer pollutants compared to ICE vehicles when they are on the roads.
"There is no denying that removing ICE vehicles from the roads - by the introduction of hybrid electric vehicles, plug-in hybrid electric vehicles or completely fuelless battery electric vehicles, will aid tailpipe emission reduction," said Natsuda, a professor at the Ritsumeikan Asia Pacific University in Japan and co-author of a new book on automotive industrial policy in Southeast Asia.
But tailpipe, or exhaust, emissions are only part of the story.
Carbon emissions from making an EV, its battery, and charging the vehicle over its lifetime are also significant.
Various studies have suggested an EV could thus emit more CO2 in its lifetime than a traditional vehicle. Environmentalists have fired back saying some of these studies are funded or encouraged by traditional vehicle manufacturers or the fossil fuel industry.
Regulations further complicate the picture. In the US, for example, clean car standards are crafted in a way so that car manufacturers can get away with selling more fuel-inefficient vehicles if they also sell enough EVs.
Natsuda argues that all this means that "at the moment there is no clear evidence regarding the [net] CO2 reduction from the switch [to EVs]". He added that the most viable medium-term solution was the use of more hybrid vehicles. One recent study - conducted in partnership with the carmaker Mazda - found that the most critical factor for EV policy leading to net emission reduction lay in the type of electricity generation used by the respective countries.
In Australia, for example, the study by Japan's Kogakuin University found that battery electric vehicles would not produce fewer CO2 emissions because of the country's heavy reliance on fossil fuel for electricity generation.
EVS NOT A 'HAIL MARY'
Amid all the excitement over EVs, some industry insiders - including clean energy proponents - are pushing back, calling for caution and sobriety.
One of them, the former Aston Martin chief executive Andy Palmer, wrote in a February 15 column for the Financial Times that there was a risk of policymakers overstepping their mark by being too enthusiastic about EVs.
Palmer, who during a stint in Nissan had spearheaded the launch of the world's first mass market electric vehicle, suggested it would be better for governments with an eye on a zero emission economy to "encourage a competitive environment that sees engineers battle it out to discover and develop multiple technologies to reach that goal".
Alternatives could include hydrogen or other yet-to-be discovered solutions. "Synthetic fuels may well continue to provide the drama, noise and excitement that make sports cars so special," he wrote. "And there will no doubt be engineers and scientists whose research will see them stumble upon the application of an environmentally friendly fuel that no one previously thought possible. In other words, politicians must avoid putting all of their eggs into one glovebox."
Heng, the Singaporean deputy prime minister and finance minister who unveiled the country's EV push, expressed similar views after unveiling the new measures in his February 16 budget speech.
Pressed during an interview on why there had been a "slow move to EVs", Heng said this was deliberate on the part of the city state's government.
[The nature of adoption of many of these [technologies] is that if you start to do it in a big way, and something else turns out a lot better, then you have a lot of stranded cost," he told Bloomberg TV.
This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.
