New approach needed for automotive policy

  • Auto
  • Monday, 22 Jun 2020

The electric car evolution: Global sales of electric vehicles in 2019 was around 2.5% of global passenger car sales and is expected to reach 30% by the year 2030, according to the International Energy Association’s (IEA) most aggressive estimates.

GLOBAL sales of electric vehicles (EVs) in 2019 was around 2.5% of global passenger car sales and is expected to reach 30% by the year 2030, according to the International Energy Association’s (IEA) most aggressive estimates.

The announcements so far from the major car manufacturers indicate that the market for battery EVs will reach a tipping point in 2025 when almost all of them will follow Tesla and produce similar products.

This will set the tone for the disruption of the internal combustion engine (ICE) market. But despite governments pushing the adoption of EVs, there are still a number of barriers to overcome before the majority of customers are comfortable with the switch from ICEs to EVs. Based on a customer survey by Deloitte in 2018, the three most important customer concerns regarding EVs are: driving range, cost premium and charging infrastructure. Understanding the technological progress being made across these areas can give an insight into when and how these barriers will be overcome.

EV price premium

Currently, the price premium for a Tesla Model 3 over a comparable D Segment Toyota Camry XLE is 35% in the US and without incentives. The breakeven for a Tesla Model 3 vs the Camry XLE is approximately five years.

For a typical buyer, this is a deterrent to make the switch. However, prices for battery packs used for EVs have been reducing from US$1,000 per Kwh in 2008 to around US$120 per Kwh currently (an 88% decline) and is expected to continue its price reduction by 7% per year, given the rapid advancement is battery chemistry.

It is expected that by 2024, prices will fall to US$100/Kwh. At this price point, it is widely agreed that EVs would be on par with the price of ICE vehicles by 2025.

Tesla has recently cut the price of the Model 3 by 5% and is expected to keep reducing the price as the cost of batteries go down. Other manufacturers like Volkswagen, Kia, Hyundai, Nissan and BYD are all committing billions into developing EVs and are already launching their EV models.

EV range anxiety

One of the major barriers customers see when considering to buy an EV is the electric range. This barrier is also known as “range anxiety’” People want to be sure that they are able to drive from A to B without having the stress of ending up on the side of the road with an empty battery pack.

With new battery chemistry rapidly being developed, the range of EVs are currently 560km for the Tesla Model 3 LR. These longer range EVs will become common place among other manufacturers as they catch up with Tesla in battery chemistry development.

Recently, Tesla acquired Maxwell technologies to develop Maxwell’s dry electrode technology that would enable Tesla to produce cheaper cells with higher-energy density that would enable them to use less batteries per vehicle and still achieve longer range and push the range even further up to 1,000km.

This is the point where range parity with ICE vehicles will make EVs more attractive. It is expected that the cycle life of these batteries would be able to achieve 1,000 times (charge and discharge cycles) from the current 500 times. However, this is not considered adequate battery life for commercial vehicle which pack in more km per day than the average commuter. The race is now proceeding to develop long-range batteries that can achieve 4,000-time cycles. This will be the disruptive point for the commercial vehicle market

Charging infrastructure and charging time

By 2025, the majority of car manufacturers will probably be dedicating production of EVs in the affordable and in the low-end segment and drop production of ICE vehicles. The explosive demand for EVs will then drive the demand for charging stations throughout the country. Essentially, there are three basic categories of charging stations. The first is the residential charging stations. Data from the US and Europe indicates that the residential charging commands up to 60% of the market share. There are special wallbox designs that are specially configured to charge safely up to 7 KW per hr (charging time of 11 hrs).

This will allow shorter charging times as compared to a normal power outlet, which only charges at 3.7KW per hour (charging time of 26 hours) for an 80KW battery.

The second is charging while parked in commercial buildings or offices for a fee. Again, wallbox designs allow for safe and faster charging of the batteries up to 22KW per hour (charging time reduces to 4 hours).

The third is the fast-charging stations capable of delivering a charge of 50KW per hour or the ultra-fast charging stations that can charge up to 150KW per hour. These chargers may be at rest stops to allow for longer distance trips and can charge a EV in 30 minutes. Given the improvements in battery chemistry, the charging times will continue to be reduced further over the years.


EVs prices will continue to deflate and disrupt the consumer ICE market. Rapid development of new battery technologies by Tesla, Panasonic, LG Chem, CATL and Samsung are pushing the EV range from 500km to 1000km per charge. With the development of the million-mile battery by CATL; the light commercial vehicles, buses, vans and taxi market will be the next sector to undergo disruption. The announcement last week of the production of the semi-trailer truck by Tesla will be a game changer for the transport industry as these trucks will operate for a longer life and thus lower cost when compared to the current ICE trucks.

Policy options

Our neighbours in Thailand and Indonesia are aggressively inviting foreign direct investment (FDI) to assemble EV with local content requirements. Indonesia, in a Presidential decree, has set a target for EVs to make up 20% of the vehicle market by 2025. However, it seems that Malaysia is still lacking the incentives, infra and support structure to promote the large-scale use of what many deem the more environmentally friendly and cheaper mode of transport.

Import tax exemptions have been phased out with exemptions for imported electric vehicles being the last to go on Dec 31,2017. Instead the New Automotive Policy (NAP 2020) primarily focuses on embarking on a New Vehicle Project in EVs. To date there has been no reports on the status of this New Vehicle Project.

Our nation’s track record has been best when we have collaborated with foreign partners rather than going on our own as in the case of Proton. Under the circumstances, would it not be better for us to review the NAP 2020 and adopt a different approach? The transport sector is a key driver of a nation’s competitive advantage and policies that regress that advantage will have serious consequences for the country.

Param Sivalingam is former project director for the Klang Valley MRT Serdang-Sungai Buloh line. The views expressed are the writer’s own.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights


Next In Business News

IOI Corp offers to buy debt notes
Indonesia’s higher coal output target thwarted by heavy rains
H&R to invest RM200mil in speciality manufacturing plant in Lumut
AirAsia X proposes to pay 0.5% of RM34bil debt owed to creditors
Haily bags RM25mil project
FBM KLCI rally extends above 1,600 points
Sunway Property revises sales target to RM2bil
Gamuda unit acquires Vietnam land for project
Brace for crude palm oil price correction
Sunway Malls unveils its e-commerce platform

Others Also Read