Introduce the rise of electric two-wheeler in Southeast Asia

Introduce the rise of electric two-wheeler in Southeast Asia
The electric two-wheeler market has a promising future. Competition is still intensifying, and whoever can provide consumers with a full range of better products and travel experiences has a better chance. Today's article is mainly about the overview of two-wheelers.
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    Two-wheelers (motorcycles and mopeds) are the most common mode of transport in Vietnam. Delivery services such as take-out and express delivery, as well as the sharing economy, are booming, and future demand will also create more new incremental space for the electric two-wheeler industry in the region.

    The demand will not only bring opportunities for development of the brand itself, but will also greatly promote the adoption of electric two-wheelers throughout the region. In the delivery scenario, users have higher requirements for
    the performance, strength, range, speed(fastest motorcycle in the world), and charging efficiency of electric two-wheelers.

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    The market is becoming saturated

    Vietnam’s two-wheeler market ranks second in the Asian region after Indonesia. Ranked fourth in the world, behind India, China and Indonesia. However, in terms of trends, the annual sales of two-wheelers in Vietnam began to increase in 2016, peaking at 3.6 million units in 2019, and then declining.

    On the other hand, the market is also close to saturation: in 2020, the number of registered two-wheelers in Vietnam reached 65.2 million, with 67 per 100 people, which also means that there are two-wheelers for every three people in Vietnam, and the per capita ownership rate has reached a high level.

    In terms of segmentation, sales of electric two-wheelers have increased significantly in recent years, from 163,000 units in 2019 to 237,000 units in 2020, a growth rate of 45%.

    The market is becoming saturated

    Globally, Vietnam is currently the world’s largest and second largest market after China. It has the largest share and has grown substantially. Vietnam’s electric two-wheeler market is expected to reach $8 billion by 2025.

    Electric two-wheeler market environment

    • Relevant regulations

    Manufacturing and assembling two-wheelers in Vietnam requires relevant approvals and accreditation certificates to enter the market. Before placing them on the market, imported two-wheelers must obtain a certificate of conformity for technical safety and environmental protection inspections issued by them.

    Imported vehicles are subject to import taxes and customs duties. Varies according to vehicle characteristics (e.g. engine displacement) and country of origin. This protects local industry, but also increases the cost of components that are not locally manufactured, such as batteries.

    Electric two-wheeler market environment

    • Policy environment

    A number of policies have been implemented to promote cleaner modes of transport. Motorcycles are restricted or banned in some areas, but there is a lack of policies to support the sale and production, as well as measures to promote charging infrastructure and battery swapping systems.

    Problems encountered in the process of development

    • Demand side

    Safety, range and cost of use are important considerations when purchasing an electric two-wheeler. Currently, use and operation are still subject to the same taxes and fees as fuel two-wheelers.

    And the lack of incentives such as subsidies for vehicle purchases makes high prices the main reason for restricting consumer purchases. Cheap electric motorcycle have a shorter lifespan than gasoline-powered two-wheelers of the same price, while high-quality products require a higher cost of ownership.

    • Supply side

    From an industrial chain perspective, there are also no policies to support manufacturers and their supply chains. High production costs (especially for lithium batteries) and low demand may discourage manufacturers from switching to electric two-wheelers and three-wheelers.

    Currently, products powered by lead-acid batteries with a battery capacity of less than 4kW dominate the market. Students and seniors are the main customers of this model because a driver’s license is not required to use this model of vehicle, and the vehicle price is much cheaper than a vehicle with a lithium battery.

    For other consumer groups, electric motorcycle battery may be more attractive. However, due to the high price of the whole vehicle and the limited number of models, most customers still choose to buy fuel two-wheelers.

    Problems encountered in the process of development

    • Infrastructure

    Lack of investment and support in research, provision and operation of charging infrastructure. At present, the electric motorcycle charger network and battery swapping system for two-wheelers in Vietnam are still limited, and users mainly charge at home.

    Charging stations are mainly operated in cooperation with the venue, which is responsible for providing space for the venue and the day-to-day operation of the charging station, installing, maintaining and repairing the charging infrastructure, and customer service.

    The electric two-wheeler industry cannot rely solely on customer demand in the early stages, so in order to encourage the development of the industry, policies related to the demand side, supply side and infrastructure should be introduced to vigorously promote the development of the industry.

    The development of the parts industry chain

    The existing supply chain of two-wheelers with internal combustion engines can be effectively utilized, and companies capable of producing batteries and other components can be united to manufacture and assemble to support the development of the electric motorcycle supply chain.

    The development of the parts industry chain

    At present, components such as batteries, controllers and motors mainly rely on imports, and a small number of local suppliers also appear, such as local battery suppliers, mainly lead-acid batteries.

    The production capacity of other components (controllers, motors) is still very limited. When it comes to manufacturing and assembly, the motor and controller are usually supplied by the same supplier.

    On the one hand, localization is to better help the development of the brand itself by integrating products and operations that meet market demand. In addition, localization issues need to take into account government policy requirements. In addition to being a difficult condition, moving the supply chain to the local market can also further help companies outcompete competing brands in terms of price. With the adjustment of market demand and policies, electric two-wheeler manufacturers and related enterprises need to make timely adjustments.

    Conclusion

    In general, the development of Vietnam’s electric two-wheeler industry is largely driven by the market, and preferential treatment policies for the development of the industry are relatively limited.

    Faced with the gradual saturation of the two-wheeler market in Vietnam, these manufacturers are gradually turning to exports. The Vietnamese market has advantages such as a strong and well-established two-wheeler supplier network, low labor costs, and political stability.

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