The electric vehicle (EV) market is hot right now — more than 10 million electric vehicles are running globally and if current growth rates continue globally we can expect to reach the stated policy scenario target outlined in IEA’s flagship World Energy Outlook report of 145 million electric vehicles by 2030 across all segments. However, a concerted effort will be needed to hit the sustainable development scenario target of 270 million EV by 2030 — in order to align climate goals with the Paris Agreement of net-zero emissions by 2070.
Clear evidence that electric mobility is set for rapid growth is seen from the fact that electric car registrations rose 41% during a pandemic year when car sales overall dropped. Increasing adoption of electric mobility in emerging APAC economies and improved EV and battery manufacturing capabilities in Southeast Asia represents significant opportunities for entrepreneurs who can deliver the products and services that make the market more attractive and efficient.
Electric motorbikes, three-wheelers, and delivery vehicles are becoming a common sight across Asia but we know in order to make a real leap in the path to net-zero carbon emissions, we need to see a lot more electric cars and trucks which impact a much larger carbon footprint. Moreover, the lack of charging infrastructure in countries such as India, Malaysia, and Indonesia continues to hamper the growth of the Asian market. For the EV sector to continue to scale faster in Asia, future growth is impacted by a number of key factors — government policies, investments by major automotive OEMs, lower battery prices, and better charging infrastructure.
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These challenges, potential solutions, and innovations that will support electric mobility growth in Asia were discussed in episode two of Asian Development Bank’s Climatic series. The two-part episode included a talk show where host Linh Thai discussed solutions to remove potential roadblocks with industry experts, and a solution showcase where startups pitched their innovations to the panel of VC investors.
Linh analysed the current state of the industry with Sohail Hasnie, Principal Energy Specialist at the Asian Development Bank and a peer reviewer for the annual electric vehicles outlook of the International Energy Agency. Hasnie began by stating that the rising number of electric vehicles is already having an impact on mitigating the effects of climate change. From the launch of the first Nissan Leaf in 2010 it took five years to hit 1 million EV’s, but the next five years have seen exponential growth to 10 million he pointed out.
An electric vehicle produces 9 Kgs of CO2 over a 100 km running distance as opposed to 18 ks of carbon dioxide emitted by a regular car, Hasnie explained. He added that since electric motors are 98% per cent efficient, they also deliver huge energy savings — a crucial factor for countries in Asia still largely dependent on fossil fuels.
So while it is clear that electric vehicles can make a significant impact on mitigating climate change, the need of the hour is for entrepreneurs who can commercialise and apply new EV technologies to ensure the exponential growth projections of the market does not run into obstacles.
Asian Development Bank also has a venture arm called ADB Ventures which supports such initiatives. One recipient of the organisation’s investments is India-based company, Euler Motors, which is focused on the light electric commercial vehicles segment. Bridging gaps in the underserved EV market in one of the world’s most densely populated economies, ADB’s support could help the company develop its services and ultimately scale regionally.
Investing in double bottom-line impact
Linh Thai asked panellist Doug Parker, an automotive founder turned investor with VC firm Wavemaker Partners about some of the electric mobility startups they have invested in. Parker explained that lithium extraction is a really interesting area for innovation today because faster and environmentally friendly lithium extraction methods will deliver the kind of double bottom-line impact we need to tackle climate change, while still ensuring the EV market continues to flourish.
Parker said his firm has invested in Summit Nanotech which developed an environmentally friendly, faster and more affordable way to extract lithium. “We’re going to need a lot more lithium as we scale up electric vehicles and this company can help us get it out of Argentinian, Chilean and Bolivian deserts where water is scarce,” said Parker.
Another double bottom line impact company they have invested in is called Vflow which builds flow batteries that can be used with existing service stations and alleviate problems that electric vehicles might cause to existing electricity grids. Better battery technology is at the core of electric vehicle innovation but is highly problematic due to the environmental impact of current battery manufacturing methods.
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Parker elaborated further on the areas where he believes there are significant opportunities: “We are interested in opportunities around electric service stations — how you can get these service stations connected to the grid again. We’re really excited about commercial fleets — how you’re going to charge those fleets but also how you are going to route those fleets, maintain the batteries over time and how are you going to resell those cars.”
The amount of innovation going on in the EV space really sets a high bar for any company that wants to compete in this space. Parker said his focus was on trying to find companies that can have a “tenth of a gigaton impact — reduce 100 million tons of carbon annually from emissions as well as have a 100 million dollar run rate. Now that’s a pretty tall order but it also helps us really make sure we’re focused on the biggest opportunities. So we are definitely focused on not just dollars but large scale carbon reduction.”
Changing ambitions are leading to higher investment
Sophia Nadur runs the corporate venture capital arm BP Ventures at energy giant BP and investing in electric mobility might seem to be in conflict with their core business but Nadur says BP has a new vision to reimagine energy for the planet. Nadur said BP has “adopted an ambition to become a net-zero company and also help the world get to net zero. So we don’t see electrification as a threat.”
Startups are crucial to this ambition, thinks Nadur, because the energy transition is happening so quickly. Even though BP has deep technology expertise and capabilities, startups can help them find new solutions to old problems, integrate and take new technologies to market faster. Given BP’s resources, this is a potentially excellent synergy of deep pockets and nimble innovators who can together help tackle the energy transition head-on.
Therefore BP Ventures plays an important role for BP to achieve its vision and invest in technology companies that can help BP reinvent itself. It can also help them reduce their emissions and open new opportunities in adjacent emerging digital technology areas. “Because electric vehicles enable much more digital tech stack integration, it’s important for smaller companies to think about it,” added Nadur. BP Ventures has invested in a Chinese company called Publisher which has a tech stack that delivers charging to private cars and fleets, as well as offering battery management capabilities.
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ADB Ventures’ recent investment in Euler Motors crystalises the institution’s commitment to meeting net-zero emissions. Because commercial vehicles run extensively — about 30000 km a year — there is a huge opportunity to reduce India’s carbon footprint. Euler CEO Saurav Kumar said that they are focused on India for now since the country buys around 600,000 commercial vehicles a year — representing a 10 billion dollar market. He believes their vehicles will have strong appeal in regions like Southeast Asia and Europe, so he is confident that Euler can scale globally if they succeed in India.
Kumar thinks there has been a big shift in how the EV sector is perceived in India. He is upbeat about the future since government support is strong with forward-looking policies and with India a signatory to the Paris climate goals. With pollution reaching severe levels in India the government along with the entire ecosystem of OEM’s, charging networks and battery suppliers are together making a big push to develop the market in India, explained the Euler CEO.
“Every month India is seeing new OEM vehicles getting deployed in the market — lithium was a major inhibitor but lithium cell prices have come down from around 800$-1000$ per kilowatt-hour to 200$ which is a huge cost reduction so the total cost of ownership has started making sense for people,” he added.
Shaping government policy in a critical decade for electric mobility
Talking of government policy, a perspective on what areas governments around the world need to work on to support the sector was given by Kartik Gopal, Senior Industry Specialist at World Bank’s International Finance Corporation. Gopal explained the challenges: “In the short to medium term, you do need some financial incentives to bridge the cost gap between electric vehicles and ICE vehicles, Additionally subsidies to support charging infrastructure development for passenger cars are needed as well.”
Supply chain issues include dependence on minerals like lithium, nickel, cobalt, and manganese for batteries, and rare earth minerals used in high powered electric motors. These minerals are not easily available across the world which could put some countries in a dominant position in controlling the supply of such minerals. “There is a possibility of an oligopoly emerging,” said Gopal, “so we need to make sure it does not lead to another set of challenges for accelerating the adoption of EVs. There has to be sufficient investment in the supply and also in making these resources available for any country that wants to develop its EV market.”
Overall he is optimistic that government policies will adapt quickly enough because he is seeing very keen interest in almost every country where IFC operates. “People are motivated to find solutions.” believes Gopal. This gives him hope that countries will be able to come together and find solutions to the pragmatic and political difficulties of meeting the world’s electric mobility goals.
Electrification in the automotive industry is happening fast and is a major contributor to meeting Earth’s net-zero carbon goals. The entrepreneurs who can help reduce Asia’s carbon footprint will play a major role in making Asia more resilient to climate change. The second part of the episode was a showcase of electric mobility innovators in Asia. Three chosen startups Green Li-ion, Lithion Power and ETRAN showcased their products to the panel of electric mobility investors.
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This article is produced by the e27 team, sponsored by ADBV
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