Electric vehicles (EVs) are set to achieve the same sales figures as internal combustion engine vehicles (ICEVs) by 2030 and outsell ICEVs by the year 2035, says Maybank Kim Eng Research.

The penetration rate for EVs currently stands at 4% and is expected to surge five times to 20% by 2025.

The figures are “significant” for Asean, which has a market of 40 million units in the four-wheels segment and 220 million units in the two-wheels segment.

In the region, Thailand, Indonesia and Malaysia make up the three largest four-wheel market segments in terms of sales. The three countries also represent a 75% market share while also being the production hubs in Asean.

In the two-wheels segment, Thailand, Vietnam, Indonesia and Malaysia command 99% of the market share in sales in the region.

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While key drivers for EVs in Asean include falling costs, government policies as well as consumer preferences for cleaner and greener lifestyles, the automotive market in Asean is still “very focused” on ICEV.

EV adoption, says the research house, is still in its early stages with penetration in the Asean region standing at below 1% for now.

According to Maybank Kim Eng, challenges pertaining to accelerating the adoption of EV in this part of the world includes price, charge time required, distance or range between charges, reliability and availability of charging stations, as well as variety in model options.

That said, government policies in the form of incentives could support the development of infrastructure and improve the affordability rates of EVs, says the research house.

Some examples cited by Maybank Kim Eng include recurring fiscal incentives such as fuel taxes, special lane access, toll exemptions, free parking, and so on.

In the meantime, original equipment manufacturers (OEMs) “must spearhead innovation in terms of battery reliability and technology”.

“To leverage on opportunities in EV, Asean should look at attracting China’s EV investment and at potential EV partnerships. China has a proven EV model with complete value chain and proven EV companies. Asean could be a right-hand-drive EV market for China,” writes the research house in a statement on April 21.

Liaw Thong Jung, associate director at Maybank Kim Eng Research, says: “Thailand, Indonesia and Singapore remain ahead of the pack in terms of developing EV-friendly policies.

On the other hand, Malaysian consumers are very price-sensitive and pro-national cars, whereas the Philippines prefers motorcycles. Fuel subsidies in the latter two countries also contribute to higher consumer preference for ICEV.”

“We see Singapore as the most forward-looking and the fastest to embrace e-mobility in Asean. It has underlined its intentions to phase out ICEVs by 2040. As the country is the most urbanized (100%), with the highest density (8,358 people/ km2) and smallest land area (700km2) among its Asean counterparts,” Liaw adds.

“It has the highest disposable income in Asean. Its relatively small land size reduces range anxiety concerns. It does not subsidise fuel, which makes it easier to transition to EVs. Its efficient road transportation system relative to its peers is a key enabler to adopting autonomous driving.”

In a March 21 broker’s report by Maybank Kim Eng Research, Liaw has rated the Malaysia automotive sector “positive” as he sees EVs fast approaching a tipping point.

“Decarbonisation agenda, pro-EV policies, technological breakthrough, urbanisation push, infrastructure-readiness, e-mobility and the millennial generation serve as catalytic fuel to super-charging the EV revolution,” Liaw writes.

In the same report, Liaw highlights that EV penetration is set to be on par with ICEVs by 2030, and foresees “faster adoption of two-wheels versus four-wheels in Asean”.

To Liaw, the transition to using EVs is gaining pace with the global climate push to reduce greenhouse gas emissions (GHG) and the imposition of stricter carbon dioxide emissions regulations leading to punitive penalties around the world.

“[This has led to] governments worldwide regulating the phasing out of ICEVs and incentivizing EVs; and (ii) global automotive OEMs re-strategizing vehicles pipelines with a strong push towards electrification,” he writes.

“The EV adoption could accelerate as: (i) total cost of ownership (TCO) for EVs fall over time, due to technological breakthrough and rising economies of scale, (ii) EV infrastructure expands; and (iii) the millennial generation adopts EVs,” he adds.