E-scooters on the Island of the Gods show off Asia's green shoots

E-scooters on the Island of the Gods show off Asia’s green shoots

After nearly three years of Covid-induced lull, the region is buzzing again as countries do away with virus restrictions and encourage in-person meetings.

The past few weeks in Southeast Asia have been busy, with many high-level international conferences taking place in Bali, Bangkok and Singapore. After nearly three years of Covid-induced lull, the region is buzzing again as countries do away with virus restrictions and encourage in-person meetings.

For Vivek Lath, partner with McKinsey & Co. Another thing popped up. At this year’s G20 summit, on the tropical island of Bali, several companies offered electric two-wheelers for attendees to move from their hotels to the main conference complex. Local police also installed electric motorcycles to accompany the delegates. Lath believes this is evidence that the electric car revolution in Southeast Asia has taken off – albeit on two wheels.

“Many companies are aware that electric two-wheelers will be used for the first time in this part of the world,” Lath said in an interview in Singapore on Friday. “It’s a part that’s going to accelerate faster.”

In fact, in the crowded cities of Southeast Asia, from Hanoi to Jakarta, owning a smaller car makes more sense. For the emerging middle classes, the costs are also easier to bear, considering that the cost of battery-powered cars is still relatively high.

Rahul Gupta, a Lath Fellow and Associate Partner at McKinsey, believes that two-wheeled electric vehicles could account for up to 50% of the total motorcycle market in the region by 2030, compared to 20% for cars.

Countries like Indonesia and Vietnam — already large markets for scooters and motorcycles — will be driving this growth, Gupta said, especially as last-mile delivery companies like Grab and GoJek commit to converting their entire fleets to electric vehicles.

Indonesia Battery Corp. Inc., a state-owned electric vehicle maker, is set to produce 50,000 battery packs for two wheels next year to support the roughly 115 million motorcycles it eventually sees running on the country’s roads.

Hero MotoCorp Ltd. revealed: India, the world’s largest two-wheeler maker by volume, last month announced its first electric scooter under the Vida sub-brand. One nifty feature for short hops in the neighborhood is the limp house safety function that will limit the moped’s top speed to 10kph, allowing it to cover up to 8km on an almost depleted battery.

Even companies in developed markets in Asia are starting to join. Japan’s Honda Motor Company is doubling down on its plans to introduce electric motorcycles, with the goal of rolling out at least 10 models worldwide by 2025.

Population growth and urbanization trends are supporting sales of two-wheelers in the developing world, BloombergNEF wrote in a report released in June.

“Urban residents will continue to spend more on transportation as they get richer, and those who live in congested areas with inadequate public transportation will continue to find two-wheeled vehicles better suited to crowded streets than passenger cars,” the analysts wrote, adding that unlike passenger cars Passengers, the fuel efficiency of new gas-powered two-wheelers has not improved significantly over time.

“In the US and Europe, enthusiasm is usually a big part of two-wheeler sales,” said Lath. “Here in Asia, it’s actually a daily need. Much of last-mile connectivity relies on two wheels—not just moving goods, but getting people from one point to another. That just doesn’t happen in other parts of the world.”

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