Green investments to support the building blocks for Asia’s EV transition

Global electric vehicle (EV) sales are on an upward trajectory, setting new records1 and sparking optimism for a greener future of transportation. Charging infrastructure is improving, and venture capital investments in the sector are defying trends. However, as the world shifts gears towards sustainable mobility, the adoption of EVs in Asia is trailing behind. This prompts a crucial question: Is Asia prepared for this EV overhaul? To truly support Asia’s transition, it is crucial to invest in the foundational building blocks that will pave the way for an accelerated EV adoption in emerging Asia, writes Jugnu Pati, ADB Ventures’ Fund Manager.

In 2022, Asia contributed a staggering 17.96 billion tons2 of carbon dioxide emissions, surpassing the transportation responsible for 1.6 billion tons3 of carbon emissions annually, the urgency to address the environmental impact of Asia’s growing trade and supply chain activities cannot be overstated.

While a select few Asian markets have emerged as frontrunners in the global EV market, most others have been slower to embrace low-carbon technologies for mobility solutions. Considering Asia’s pivotal role in global trade, it is imperative to develop tailored solutions that consider the unique challenges and opportunities faced by the region.

Asia needs tailored EV solutions that factor in ground realities

Considering that Asia is projected to contribute about half of the world’s trade growth by 2030, the Asian EV sector is going to be a decisive battleground for achieving global decarbonization. Two major factors in the transition will be utility and costs. In other words, the first phase of EV adoption in Asia is being driven by fit-for-purpose electric vehicles offering the same productivity as internal combustion engine (ICE) vehicles, with reduced total cost of ownership. Specific problems are being addressed by incorporating features such as ‘on-road charging’ to lower the demand for regular stops and installation of new charging points to overcome key pain points for users.

Startups Manufacturing Fit-for-Purpose Electric Vehicles:

In India, Euler Motors produces 3-wheel vehicles that incorporate on-road charging with special   features such as a bigger battery of ~13kWh capacity and a higher range. Combined with the vehicle’s best-in-class payload, these features increase productivity and lower the cost of mobility.

In Vietnam, Selex Motors, designs its own batteries with energy density four to five times higher than lead-acid batteries, enabling long battery life span and greater travel distance. The company has also established a battery swapping network for e-scooters.

In Thailand, ETran custom designs vehicles for crowded urban areas and narrow streets with specific turning and tilt angles ETran also provides battery swapping for two-wheels vehicles at its power stations.

Commercial fleets are paving the way

Businesses are at the forefront of Asia’s EV transition. Commercial fleets are sensitive to the increasing price of fuel and high maintenance and operating costs of ICEvehicles. Companies in the business-to-business (B2B) space are thus being incentivized to electrify their fleet as the low operating expenditure and total cost of ownership of EVs allows for higher margin extraction.

Startups Electrifying Commercial Fleets:

BlueSmart and Magenta in India, as well as Mober in the Philippines are implementing different versions of the third-party logistics model using electric vehicle fleets.

Zypp Electric in India, and Blitz in Indonesia are electrifying fleets and consolidating deliveries of e-commerce companies, traditional retailers as well as courier companies, contributing to the reduction of carbon footprints.

Finance and Specialization are the emerging trends that drive adoption

Innovation is paramount for driving the uptake of green logistics and transport. Specialized companies such as those focusing on battery pack manufacturing, charging station deployment, and electric vehicle financing are emerging as key players that demonstrate crucial insights and tailored solutions to the two main challenges to EV adoption in the region: lack of easy access to charging and high upfront costs.

Startups offering specialized finance solutions and battery infrastructure:

Revfin offers finance for electric rickshaws across more than 1000 locations in tier two and three cities in India by leveraging data analytics, non-traditional underwriting methods and a tech-driven platform. Three Wheelers United is similarly offering a range of financing solutions to electric rickshaw drivers in India. Electrifi takes a more end-to-end approach by offering vehicle leasing solutions and a fully integrated software analytics platform.

For battery infrastructure, Battery Smart (India) is converting a significant number of electric rickshaws from lead acid to lithium-ion batteries, by offering battery swapping services. Tiger Energy is addressing a similar challenge that hinders EV adoption in Bangladesh.

Innovative solutions are pivotal when it comes to addressing the challenges that are currently preventing more people from switching to electric vehicles. Startups embarking on this transformative journey, however, require investment to enhance production efficiency, scale operations, and improve affordability.  This places an increasing emphasis on the role climate tech-focused funds, such as ADB Ventures, can play in fostering the growth of the EV ecosystem by investing in early-stage companies across the value chain — from electric vehicle manufacturers (such as Euler Motors and Selex Motors) and charging infrastructure companies (such as Tiger Energy) to electric fleet management solutions (such as Blitz) and financing solutions such as Revfin, Three Wheels United, and Electrifi.

The evolving landscape of EV transition models within Asia promises exciting times ahead. As the market matures, we can expect a surge in innovation with insights and experiences from one influencing the other regional markets. As Asia is being earmarked to see tremendous growth4 in the electric mobility sector, it is on the cusp of becoming a global EV production hub, ready to embrace a sustainable future sooner rather than later.