Energy Transition – An evolving journey

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The transport sector accounts for 26% of the overall global energy consumption and nearly 20% of global CO2 emissions, 75% of which are attributed to road transport. The transition to “clean” modes of transport – including Electric Vehicles (EVs) – is thus seen as both inevitable and a key contributor to net-zero targets. It is forecast that global rates of EV production and sales will grow at 45% and 53% per annum respectively until 2030, driven by investments from governments, corporations and entrepreneurs in the EV space. EVs are predicted to comprise 72% of the global vehicle fleet by 2050.

Although Asia Pacific has established global EV market dominance with 42% revenue share in 2022, current levels of EV adoption vary substantially across the region. According to McKinsey, China in particular dominates the global EV market, having already reached a 16% adoption rate for new EVs and accounted for 35% of global EV exports in 2022. Per an IEA report, as more than half of EVs on roads worldwide are now in China, China is responsible for approximately 59% of global EV sales, exceeding its 2025 target for new EV sales. DNV forecasts the uptake of EVs in China to be the fastest among all regions, with EVs reaching 50% of new vehicle sales there by 2027 and comprising 50% of the entire fleet of vehicles by 2031. Along with Japan and South Korea, China is considered a mature market in terms of its EV ecosystem, which includes well-developed physical infrastructure, bespoke regulation and a range of financial subsidies.

Other Asian countries, in particular India and the majority of the ASEAN members, have been lagging behind their North Asian peers partly due to the regulatory delays and the lack of bolder policies to promote EV uptake. However, per a [recent] IEA report, India, Thailand and Indonesia are demonstrating promising signs for EVs market. 2022 was marked as a growth year for these countries, with the sales of EVs more than tripling compared to 2021. In India, the increase of EV and EV component production have been largely driven by the government’s $3.2 billion incentive program that attracted $8.3 billion of investments into the space. Additionally, DNV observed that India is pushing for a market share in EVs, with a projected 81% share of new sales of two- and three-wheelers being electric by 2030, and almost 98% in 2050.

The chart below shows the EV adoption in selected Asian countries in 2021 and in summary shows the EV adoption by selected Asian counties in 2021, namely that:

  • China had a 16.1% EV adoption rate
  • South Korea had a 6.5% EV adoption rate
  • Australia had a 2.9% EV adoption rate
  • Japan had a 1.2% EV adoption rate
  • Thailand had a 0.7% EV adoption rate
  • India had a 0.5% EV adoption rate
  • Malaysia had a 0.3% EV adoption rate
  • Indonesia had a 0.1% EV adoption rate
Key takeaways
  • Electric vehicles (EVs) will be the only choice for new car buyers in most developed economies by 2035.
  • As global EV sales rose by 55% in 2022 Asia, has retained its market position as the world’s largest EV market.
  • The surge of EV sales has driven demand for batteries and related minerals, with China dominating battery and EV component markets.