Despite COVID-19’s impact on the Southeast Asian economy, the region is recovering faster than expected, with foreign investments pouring in, especially in the electric vehicle industry.
Driven by the hope of a more sustainable future, environmentally conscious consumers from Indonesia, Thailand, the Philippines and Singapore are eager for green, electric vehicles (EV), including Tesla models.
An increasing interest in EVs
Before the pandemic, Toyota, Mitsubishi and Honda were the ultimate brands reigning in Southeast Asia, but a greener awareness is emerging in the region after the lockdowns. Tesla is pushing swiftly into the market, ranking first in Google searches. Nonetheless, most ASEAN countries are still slow to accept battery-powered EVs and build battery production plants.
In 2019, we discussed whether the region was gearing up for an EV revolution
According to Frost & Sullivan’s study, more than 50% of the ASEAN population would consider purchasing an “electrified vehicle”, with only Vietnam showing increased reluctance since 2018. The car’s power source impacts 81% of the surveyed participants’ decision with Thailand and the Philippines, reflecting a higher level of concern for the environment.
Keen focus on Singapore and Indonesia
Tesla Motors’ first incursion in the ASEAN vehicle market was in Singapore in 2010. However, back then, it didn’t receive support from the government. When Elon Musk, CEO of Tesla Motors, suggested the country switch to solar or battery power, it taxed his company’s sedans with a carbon surcharge. After ten months, it closed its office in the island nation because of the government’s lack of green technology incentives and subsidies.
After negotiations and approved tests, the Model S was permitted again in Singapore in 2016. The current car emits the least CO2 per km in the market, and also gives owners the added incentive of decreased road taxes. Not only that, from 2022, the car will also be offering lower registration fees and rebates. These government-backed plans to increase the use of EVs contribute enormously to reducing carbon emissions, particularly as the country is expanding its use of solar and wind plants in the electricity supply grid year after year.
The company recently announced that it would be allowing the purchase of its vehicles using Bitcoin globally later this year. This move caused a crypto-currency price surge worldwide and earned Tesla a 2% share increase after the announcement.
Musk’s company has been in discussions with the Indonesian government to set up contracts for sourcing the nickel used in electric vehicle batteries as it looks to expand into the Southeast Asian market.
The EV industry may be vital for the resurgence of the region’s economies post-pandemic and already plays a significant part. In 2020, 70% of Indonesia’s foreign investment funding went into the sector as the country has a quarter of the global nickel reserves. Tesla sees investment in the country as helping the car manufacturer secure battery and power generator plants sources.
Despite competing against EV battery giants, such as China’s CATL and South Korea’s LG Chem, Tesla caught the Indonesian government’s attention. “We are excited to work with Tesla,” Mr Septian Hato Seto, Deputy Minister of Mining and Investment, recently said. “Its lithium battery technology is among the world’s best. If we have investments from CATL, LG Chem—which also have good technology, plus Tesla, Indonesia will pick up a lot to learn.”
The American-based company is also planning to generate an energy storage system (ESS) in the country. “It works the way a mobile power bank works, but an ESS may supply power to homes and industries. Its size could be tens of megawatts or even a hundred megawatt.” Mr Seto added.
The first of Tesla’s Model S vehicles arrived in Indonesia earlier this year, offering its environmentally committed population another green alternative. The first batch of customised orders will arrive in dealerships in April.
Projections in Southeast Asia
Associate Partner and SVP Asia-Pacific at Frost & Sullivan, Vivek Vaidya, suggests that generally, consumers enjoy the electric car driving experience as they offer innovative features and use performance-enhancing technology.
The rising momentum for Tesla’s electric vehicles is inevitable in Southeast Asia as more governments provide indirect incentives to purchase EVs. However, Singapore is going a step further by reducing the upfront costs of these cars and making provisions for 60,000 charging points to be installed publicly and privately by 2030. Singapore’s Finance Minister Heng Swee Keat also announced $30 million USD worth of provisions for EV-related activities in his latest budget. By 2040, Singapore expects a significant reduction of Internal Combustion Engine (ICE) vehicle sales, and by 2050, most vehicles in the country will be electric.
For the region to truly embrace the switch to electric vehicles, implementation of more enticements such as lower maintenance costs, access to public and private charging points for cars, and improved tax incentives are necessary. Nevertheless, consumers seem more motivated with Tesla back in the market. Musk’s company is synonymous with promoting an increase in environmental awareness and innovation while pushing new digital markets and the blockchain economy to higher stages and encouraging the expansion of the electric vehicle industry.