With EV affordability on the rise, where is focus needed the most?

3 June 2024
EV not just about cars, but also two- and three-wheelers in Asia

Electric vehicles (EVs) are an integral tool to support the global energy transition. In recent years, EV adoption has surged considerably with major car brands worldwide going all in on developing electric models

This past week, the International Energy Agency launched the 2024 edition of its Global EV Outlook, a major report providing insights into the latest developments in electric mobility globally. The report’s main theme is the increased affordability of EVs, driven by growing supplies from China – but also enthusiasm from markets beyond its borders. 

Here are some major highlights: 

  • EV sales are on the rise and is expected to reach approximately 17 million in 2024, representing over 20% of global car sales. China will continue to lead the EV market with a 45% share, followed by Europe and the US. 
  • While developed markets like China, Europe, and the US dominate the EV sector, there is notable growth in developing economies such as Vietnam, where EVs account for about 15% of car sales, and Thailand, with 10%.
  • By 2035, it is projected that two-thirds of all vehicles sold globally will be electric, driven by current energy, climate and industrial policies. This projection has significantly encouraged investments in the EV supply chain.

Looking beyond electric cars

Cost will play a crucial role in accelerating the adoption rate of EVs in Asia, and China will play a key role in this transition. By leveraging its extensive industrial resources, China can significantly influence the EV revolution in Asia by investing in and promoting affordable EVs in countries like Thailand, Vietnam and Indonesia. Crucially, China’s focus on developing smaller and cheaper electric cars has already helped dramatically lower the EV barrier to entry for several markets in Asia. 

However, while cars often dominate conversations about electrification, in Asia, the key will be promoting electric two- and three-wheelers. In many Asian cities, these constitute the majority of mobility solutions and over half of global urban fleets – by 2029, the two-wheeler market will be worth as much as US$218 billion, and 30% of sales will be electric.

In India, three-wheeler “e-rickshaws” are the vanguard of the EV revolution, used for passenger transport and goods delivery, as well as two-wheelers for personal mobility. Representing 90% of the country’s nearly three million EVs, these vehicles are helping India reduce rising emissions in urban areas by cutting the usage of petrol or diesel. 

Government regulations supporting electric two-wheelers – based on the successful experience in the four-wheeler market – could spark significant change and boost sales, as proven by China’s experience and India’s success with government subsidies and exemptions. Meanwhile, increasing demand for last-mile connectivity in public transport systems like buses and metro services are also major factors. 

However, charging infrastructure remains a major challenge in most Asian markets, with more effort needed to increase the pace of investment. 

Another issue is the intricate geopolitics of EVs in a world where significant portions of the EV value supply chain is controlled by major markets such as China. For example, Indian electric three-wheeler manufacturers are highly reliant on China for critical raw materials and technical expertise. Navigating this will be necessary to ensure steady supplies. 

What about heavy-duty vehicles?

Electrifying heavy-duty commercial vehicles such as buses and trucks presents significant challenges, partly due to the size and weight of their batteries and the demanding charging requirements. 

While only a few countries are focusing on this, the outsized contribution of logistics to global greenhouse gas emissions makes heavy-duty fleet electrification essential to environmental targets, especially given their role in supporting e-commerce. 

Governments must continue to support electrification through subsidies, incentives and the development of robust charging infrastructure. With concerted efforts from policymakers, industry leaders, and international collaborations, the dream of a fully electrified transportation system can become a reality, paving the way for a greener, more sustainable future.