Huge potential for Malaysia to become the first EV hub in the region
Supportive infrastructure needed to facilitate EV adoption and industry growth
ACCORDING to the Global EV Outlook 2013 report, electric vehicles (EVs) sales more than doubled from 45,000 to 113,000 units between 2011 and 2012.
Global EV stock recorded at the end of 2012 stood at 180,000 units, which accounts for 0.02% of total passenger car stock, an indication that the EV market is just in its infancy.
The Electric Vehicles Initiative (EVI), comprising 15 member governments from Africa, Asia, Europe, and North America as well as participation from the International Energy Agency (IEA), aims to deploy 20 million EVs on the road worldwide by 2020, or about 3 million units a year, a significant jump from the current figures.
While EVs have been around since the 1800s, the EV market is only truly taking off now as technologies become more sophisticated and commercially viable.
There is huge potential for the EV market and Malaysia should take the opportunity to become the first EV hub in the region before we lose out to our neighbours. For Malaysia to own the EV space, the key challenge now is to create a local market for EVs to grow in a sustainable manner.
The first step must be to establish a supportive infrastructure to facilitate growth of the industry. Unlike the solar manufacturing industry, where Malaysia-based facilities have become leading global suppliers, the EV industry requires an entire local EV ecosystem, including charging infrastructure, batteries manufacturing, technical know-how and much more.
The need for electric mobility
Globally, EV industries and markets are set to boom. This can be attributed to escalating fuel costs and to changes in consumer behaviour, with environmental consciousness increasingly playing a primary role in purchasing.
Such trends clearly demonstrate the growth prospects for an EV economy in Malaysia. The Malaysian Green Technology Corporation (GreenTech Malaysia) believes that adopting a strategic focus on Electric Mobility will also bring many other socio-economic benefits.
Lessons learnt: How the local hybrid vehicles market soared
Looking at the growth in the local market for hybrid vehicles, there are key learning points that can be applied to grow the local EV market.
Back in 2009, during the introduction phase of the hybrid vehicle’s product life cycle, the only available hybrid vehicles were the Toyota Prius and Honda Civic. While both brands achieved international success, they met with almost zero sales in Malaysia due to the high pricing structure.
However, this quickly changed when the Government announced a 100% tax exemption for hybrid vehicles in Budget 2010, a move that saw sales of hybrid vehicles soar from 322 units to 18,967 units within three years (see chart).
As the market entered into the growth phase of the product life cycle, domestic demand for hybrid vehicles grew in tandem with technological innovation, resulting in a broader hybrid vehicles offered by car manufacturers.
This in turn resulted in greater price competition amongst manufacturers and importers, making hybrid vehicles more affordable to more consumers.
This clearly drives home the fact that Government’s intervention at the introduction phase of hybrid vehicles was critical to develop the market.
It also reaffirms the effectiveness of Government’s clear policy and attractive incentives schemes in developing nascent products and industries.
Creating a Sustainable Market for EV
To ensure the sustainability of the EV sector and to promote public use of EVs, GreenTech Malaysia is spearheading the development of a comprehensive EV ecosystem via the following key initiatives:
In August 2013, GreenTech Malaysia undertook a six-month pilot phase for Electric Bus trials to determine the feasibility of electric buses as a mode of public transportation. The results were encouraging, recording significant reduction of fuel and maintenance costs as well as carbon emissions. Based on the data gathered, Government has approved the creation of a Sustainable Mobility Fund, which will be used to fund bus operators in the purchase of electric buses to be used in public transport as the last mile connectivity to MRT and LRT networks.
GreenTech Malaysia also recently embarked on the Cohesive Mobility Solution (COMOS) project – the country’s first public EV car-sharing scheme, in partnership with CMS Consortium and the Malaysia Automotive Institute (MAI). The COMOS Programme offers public subscribers the option of renting EV cars and motorcycles to commute between MRT/LRT stations and office buildings, hotels, or shopping complexes.This initiative will be rolled out in the second half of the year, firstly in the Klang Valley and subsequently in Langkawi, Melaka, Iskandar Regional Development Authority (IRDA) and Penang. This programme will greatly promote public use of EVs.
The two initiatives above aim to jumpstart the adoption of EVs which will directly encourage the creation of a holistic EV ecosystem. First, EV charging infrastructure needs to be developed strategically to enable convenience of access, and ultimately transform Electric Mobility into an everyday norm. This will follow with the creation of cashless payment gateways, data networks, surveillance and much more. As Malaysia’s EV ecosystem supply and value chain develops, this should attract foreign direct investments in manufacturing EV spare parts, batteries and other components, creating more job opportunities in the process.
The entire product life cycle of EVs will require the initial backing of Government in the form of supportive policies and incentives, with relevant agencies charting out the blueprint and initiating the early adoption of Electric Mobility. Private sector participation can then step in to grow and sustain the EV economy.
We succeeded with hybrid vehicles and we now stand at the cusp of an even greater success with the EV market, if the government and private sector work together.
Ahmad Hadri Haris is the chief executive officer of Malaysian Green Technology Corporation (GreenTech Malaysia), a not-for-profit organisation under the purview of the Ministry of Energy, Green Technology and Water Malaysia.
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