What are Major Factors Contributing to Boom of Electric Car Market in Asia?

Posted by Rahul Gautam on May 19th, 2021

 As the air quality deteriorates and the prevalence of various lung diseases increases in the Asia-Pacific (APAC) region, the attention of governments, regulatory authorities, policymakers, and citizens is finally shifting toward the elephant in the room, that is, the large-scale usage of fossil-fuel-powered vehicles for both personal commuting and transportation of goods. The harmful emissions released from these vehicles are one of the major causes of air pollution and the rapid environmental degradation.

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To combat the situation and make the air in urban areas breathable again, governments of several APAC countries are implementing policies aimed at promoting the deployment of eco-friendly modes of transport, such as electric cars. This is, in turn, fueling the advancement of the Asia-Pacific (APAC) electric car market. For instance, as per industry experts, sales of electric vehicles grew in India by 32.0% or from nearly 576,000 units in 2018 to more than 760,000 units in 2019, among which 2,000 were passenger cars.

Falling Prices of Batteries Adding Wings to Electric Car Dream in APAC

The rapidly declining prices of the batteries used in electric cars are one of the biggest factors responsible for their large-scale adoption in APAC nations. The prices of these battery packs fell by over 77% between 2010 and 2017. Now, the average cost of an electric vehicle lithium-ion battery pack is 7/kWh. The costs of lithium-ion batteries are predicted to fall further to nearly 0/kWh in the next 5–6years. This will subsequently cause a huge upswing in the sales of electric cars in the region, as the battery price slump is necessary to make these automobiles affordable.

Electric Car Usage Highest on Chinese Roads in Asia-Pacific

In the APAC region, the sales of electric cars are currently the highest in China. Japan, South Korea, and India are the next biggest users of electric cars in APAC. The share of small electric cars is presently significantly high out of all the electric cars being sold in the region. This is primarily because of their high affordability and the cost-sensitive purchasing behavior of the people in the regional countries. Backed by the implementation of favorable government policies regarding the deployment of electric cars and the reducing prices of the batteries, the electric car industry will register huge expansion in the coming years.

Hence, it can be said with utmost confidence that the sales of electric cars would shootup in Asia-Pacific (APAC) in the forthcoming years, primarily because of the escalating pollution levels in APAC countries due to the large-scale usage of oil- and gas-powered vehicles. The rapid implementation of favorable government initiatives and subsidy policies for the utilization of these vehicles is further expected to make them popular among the masses.