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The electric mobility trend in emerging markets is gaining momentum, according to a report from Temasek and LeapFrog Investments published on September 20.
Projected green-mobility capital demand of $1.3 trillion to 2030 outstrips other sectors in emerging markets. This shift is particularly evident in South Asia, where EVs “have already reached tipping points of cost, convenience and reliability,” according to the report.
Private capital markets also have a role to play in supporting low-income consumers to participate in electric mobility in some of the world’s fastest-growing markets, the investors wrote.
Edward Northam,
Macquarie Group
Institutions looking to capitalise on the region’s growing sustainable mobility ecosystem have a significant opportunity, according to Ed Northam, Macquarie Asset Management’s Green Investments Head of Asia Pacific and global Head of Core Renewables.
“The opportunity is there. It absolutely exists and in our role, we know the capital is there too. It’s really interesting what’s happening in terms of the different pools of capital that are increasingly interested in wanting access and exposure to investing in the transition,” Northam told AsianInvestor.
Among Southeast Asian countries, India and Thailand are presenting the most compelling opportunities for EV investment.
India’s strength lies in its innovative approach to affordable electric mobility, particularly in the two- and three-wheeler segments. Thailand, on the other hand, is leveraging its established automotive industry to attract foreign investment and position itself as a manufacturing hub for EVs in the region.
THAILAND’S RISING STAR
Thailand has become a hub for EV makers looking to expand internationally, according to Michael Glancy, Managing Director of Thailand and Indonesia at real estate consultancy JLL.
“Since early 2022, Thailand has emerged as a key destination for EV manufacturers’ international expansion, successfully attracting major Chinese EV companies like BYD and Changan in 2023,” Glancy told AsianInvestor.
Michael Glancy,
JLL
Thailand owes much of this lead to its established automotive industry dating back to the 1990s, he added.
“Thai skilled labourers in the automotive sector are considered cost-effective and well-prepared for the transition to EV production, making the country an attractive option for companies shifting towards EV adoption,” said Glancy.
The Thai government’s proactive approach has been crucial in attracting foreign investment.
“Thailand’s Board of Investment and Eastern Economic Corridor Office proactively offer various policies and incentives to facilitate investments in the EV industry, recognising it as a crucial pillar for Thailand’s industrial sector,” Glancy said.
Looking ahead, he predicts significant growth in real estate demand to support the EV industry.
“Investment activities are expected to concentrate heavily on the industrial land market and modern manufacturing facilities, including logistics warehouses and factories,” Glancy said. These sub-sectors “are poised to capitalise on the significant growth/expansion potential from EV manufacturers and their associated suppliers.”
The global economic climate is also playing a role in shaping investment patterns in Thailand.
“The China+1 strategy has significantly benefited the EV industry growth in Thailand and neighbouring countries like Vietnam and Indonesia,” he said, referring to efforts by manufacturers to diversify their plants beyond China.
INDIA PLAYS
Meanwhile, India is at the forefront of innovation in affordable electric mobility solutions, particularly in the two- and three-wheeler segments, according to Temasek and LeapFrog’s report.
“EVs have already reached price tipping points for two- and three-wheeler EVs, under a total cost of ownership model factoring in lower running costs, lower maintenance charges, and subsidies,” the funds wrote.
The investors predicted EVs could comprise nearly half of India’s two- and three-wheeler sales by 2030 “with investment in infrastructure and government support.”
Temasek and LeapFrog also highlighted the role of complementary businesses in accelerating EV adoption in India. Such enterprises include companies like Battery Smart, which are “delivering tech-enabled, distributed solutions that allow for the quick and convenient charging of EVs.”
Additionally, “vehicle-as-a-subscription companies such as Yulu and Kinto One are also helping to spread higher upfront capex costs across the lifetime of ownership, allowing purchasers to lower their monthly repayments.”
Macquarie Asset Management’s Northam agreed with the significant investment and carbon emission-reduction potential in India’s EV market and ecosystem, particularly in relation to fleet electrification.
“We’ve created a business called Vertello that is set up to finance the transition of predominantly fleet owners, mainly inter-city and intra-city buses, as well as ride-sharing fleets, to move from internal combustion engines to electric vehicles,” said Northam.
“We think the transport industry represents about 15 to 20% of carbon emissions across the Indian economy. So we think that’s a massive opportunity, and we’ve put our own capital behind that opportunity,” he added.
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