Getting the green light on electric cars

Getting the green light on electric cars

Drivers have been slow to switch from fuel vehicles, but the government is hoping new policies and industry involvement will spur change

in a jam: Traffic grinds to a halt on Phahon Yothin Road during the evening rush hour. Chronic traffic jams across Bangkok are one of the reasons drivers have been reluctant to adopt electric cars. (Photo by Patipat Janthong)
in a jam: Traffic grinds to a halt on Phahon Yothin Road during the evening rush hour. Chronic traffic jams across Bangkok are one of the reasons drivers have been reluctant to adopt electric cars. (Photo by Patipat Janthong)

As of Sept 30, Thailand had 52 electric sedans on the road. There are roughly 1.3 million electric cars on the roads worldwide, but with fears batteries will flatten in traffic or flooding will lead to lasting damage, Thai drivers have been slow on the uptake.

This could be about to change. The government has launched a plan to boost the number of electric vehicles to 1.2 million in the next two decades, with a focus on industrial adoption and the first charging stations to start rolling out by the end of this year.

It's considered an ambitious target even though the industry is expanding rapidly. The worldwide number of electric vehicles has doubled since 2014, and in 2005 they were still measured in the hundreds.

This year could be remembered as a turning point, as new models made big impressions through the media.

Tesla's Model 3 -- which can travel for 344km on a single charge and sprint from 0-100kph in less than six seconds -- was launched in the US as a high volume car that comes at an affordable price, starting from about 1.3 million baht. The company last week reported its first quarterly profit in three years.

Mercedes-Benz Thailand released a nine-minute short film named Loopbreaker starring Thai-British actress Araya A Hargate and directed by well-known Thai filmmaker Pen-Ek Ratanaruang. It glamorously depicts a woman breaking through the humdrum of the day after driving Mercedes-Benz's GLE 500e plug-in hybrid electric car.

The switch to electric comes at a critical time for the environment, with the Mauna Loa Observatory in Hawaii recording atmospheric carbon dioxide at more than 400 parts per million last month -- typically the time of year when the level is at its lowest -- and scientists fearing it may not fall below that mark again.

The safe level is 350ppm, according to a study led by Johan Rockstrom from the Stockholm Resilience Centre and Will Steffen from the Australian National University. The number is based on planetary boundaries, and is another bad sign for the climate that has spurred moves to shift the worldwide economy away from fossil fuel. The rise of EVs is part of the solution.

As one of the world's major automotive producers, Thailand also needs to make a move. Increasing the proportion of EV units on the roads, and being part of the supply chain on the manufacturing side, are on the government's to-do list. But the greatest challenge could be changing the mindset of Thai consumers and the automotive industry. EVs must first win their hearts.

PLUGGED IN POLICY

There are four types of EV. Hybrid electric vehicles (HEV) and plug-in hybrid electric vehicles (PHEV) were first developed with two systems, electricity/petrol and electricity/diesel. Battery electric vehicles (BEV) were developed later, which are fuelled purely by electricity. Fuel-cell electric vehicles (FCV) represent the latest technology.

Man people electric car vehicle traffic eco friendly mobility transportation photo: 123rf

"State policy determines whether [the prevalence of EV units and manufacturers] will happen or not," said Thawarat Sutabutr, director of the Ministry of Energy's Energy Policy and Planning Office. "We can't resist that EV technology is coming. The Thai automotive industry will need to adapt and come up with new innovations so it can have a position on the world stage."

The government's strategy to increase the number of and investment in EVs is divided into four parts.

Phase one covers this year and next, and aims to open the market and drive consumer interest in EV. Measures include the introduction of 20 electric public buses in Bangkok by the end of next month, rising to 200 next year.

A quota of 5,000 imported EVs will receive a tax exemption, which will likely help keep the price down. Kasikorn Research Centre estimates that the tax exemption will make the BEV price (not include marketing cost) 15-85% higher than fuel cars; without the measure they would be 65-260% more expensive.

By the end of next year, the government plans to have 100 charging stations located across Thailand.

Phase two, covering 2018 to 2020, focuses on advancing research on efficient battery usage and increasing the number of EV units. Measures include introducing incentives to encourage the private sector to invest in EV plants.

Phase three, from 2021 to 2035, involves the government's promotion of electric cars and the improvement of the electricity grid.

From 2036 onwards, the final phase sees 1.2 million registered units of hybrid and electric battery sedans, a projection making up less than 10% of vehicles on the road. The number of charging stations would total 690.

On the infrastructure side, state-owned gas and fuel company PTT Plc and six carmakers have already agreed to develop EV charging stations and promote EV usage.

PTT has four EV charging stations in Bangkok and its outskirts.

The company plans to add value to its core businesses through biochemical and engineering polymer ventures as well as EV batteries.

The Ministry of Energy is also funding research into battery technology, with the aim of reducing the cost of EVs. For now, more than half the price of an electric car is the battery.

Mr Thawarat said state policy will drive market competition by increasing the number of EV manufacturers. The development of more effective batteries will in turn decrease EV prices and encourage Thai consumers to buy electric cars.

EV production is one of 10 industries the government is targeting for economic growth.

Mr Thawarat said this is why the private sector has turned its attention to supporting the growth of EV production.

The Thai automotive industry is expected to become a major hub for electric cars, serving a rising global and national demand.

FOR THE ENVIRONMENT

The Paris climate agreement aims to keep the global average temperature well below 2C above pre-industrial levels. With reports from the Intergovernment Panel on Climate Change stating that the transport sector generated about 23% of total energy-related carbon emissions in 2010, the government says there is a strong incentive to support EV manufacturing.

Not so fast: TV host Pattanadesh Asasappakij isn't sure how quickly EVs will take off. PHOTO: SUPPLIED

In addition, promoting EVs overlaps with the state policy of reducing energy use by 30% in 2036.

The Organisation Internationale des Constructeurs d'Automobiles ranked Thailand as the world's 12th largest automotive producer. More than 1.9 million vehicle units were produced last year, after peak production of 2.4 million in 2013.

Thailand is a production base for over 60 of the world's car parts producers, with more than 2,400 manufacturers in the production chain. Over 80% of auto parts in fossil-fuel cars and 40% in BEVs are produced in the country.

The strong production base has led government policymakers to assert that shifting from petrol-powered vehicles will be easy.

However, some critics have taken issue with this approach. The government needs to "slow down", said Thanawat Koomsin, president of the Thai Automotive Industry Association.

"The industrial sector is not against EV technology. However, [EV growth] must take place gradually. We don't want to force the industry to make a quick turn."

Mr Thanawat said he does not have a specific transition time frame in mind, but that 20 years is definitely not long enough for a variety of reasons.

The automotive industry is shaped by consumer demand. If consumers aren't ready to buy new products, the industry cannot start manufacturing them. Promoting EVs without incentives for the consumers could lead to the collapse of the industrial sector, Mr Thanawat said.

"EVs aren't popular yet because they are not the right choice for Thai consumers at this time," said Mr Thanawat. "New technology will eventually overtake old technology by itself, without the support of state policy."

The increased number of female drivers is an example of a trend taking shape naturally over time, he said. This prompted the industry to employ more female car designers.

Cars are now being manufactured to appeal specifically to women by using certain materials and colours, and installing additional special functions.

According to the Department of Land Transport, 1,502 EV units are now registered in Thailand -- 64 buses and trucks, and 1,438 personal vehicles. The latter includes 1,372 motorcycles, 52 sedans, eight vans or pickups, three microbuses, two tuk-tuks and one three-wheeled motorcycle.

Nearly half of all EV units and 49 of the sedan units are registered in Bangkok.

HIGH VOLTAGE FOR THE HIGH END

"The first group to try EVs will be a premium group -- technophiles, Ferrari buyers and high-end customers. It won't be the first car to belong to any household," said Pattanadesh Asasappakij, a car guru and TV show host.

"There's no doubt that EV technology is on the rise. But whether or not it will be popular in Thailand remains uncertain."

Pattanadesh drives a Porsche Cayenne plug-in hybrid but uses an Isuzu when travelling outside of Bangkok. He said EVs are not yet adequate for such trips.

He sees consumer behaviour as the most important factor in shaping the future of EVs in Thailand.

One factor which makes Thai consumers unusual is how they see cars as financial assets and aesthetic objects. This differs from places like Europe and Japan where cars are bought primarily for their technical specifications and usefulness while travelling.

Thais further tend to consider the resale price of their car in the second-hand market, and selling a "used" electric car isn't seen as profitable.

Bangkok's traffic jams also influence interest. Drivers often struggle to estimate how long it takes to travel from one place to another. For example, a 30-minute drive can easily turn into a two-hour drive in bad traffic.

Flash floods can also reach knee-height in Bangkok during the wet season. This uncertainty makes drivers, especially in Bangkok, hesitant about investing in battery-powered EVs, Pattanadesh said.

Still, he believes the popularity of electric cars will grow in Thailand, but only in the long term. Large companies like Toyota, Isuzu and Honda -- each with a major share of the Thai market -- are yet to heavily promote their electric models.

"They [the government] have the wrong approach in using a top-down strategy. Promoting EVs must start from the bottom up," Pattanadesh said, offering the example of providing financial incentives or tax deductions.

In August, Kasikorn Research Centre released a study called "BEV Tech Spawns New Vehicle Segment for High-End Customers", stating Thailand's BEV market would face many obstacles in appealing to consumers. Among those listed were the high prices of the vehicles, limitations in technology performance, limited and costly equipment maintenance, an insufficient number of charging stations and low resale values.

Despite this, the study offers the optimistic outlook that car companies will respond to state policy, especially those which have already produced BEVs for foreign markets from a production base in Thailand.

High-end American and European car brands, such as Mercedes-Benz and BMW, have begun to import BEVs into Thailand's luxury market.

Companies which own major shares in fuel vehicle markets, such as Toyota and Honda, might import BEVs. However, these aren't marketed to the same extent as their other more competitive vehicles.

BEV manufacturers with smaller market shares, including those from China and South Korea, can take the opportunity to build a Thai consumer base in the high- to medium-end markets, selling vehicles at a relatively affordable price.

As electric vehicles gain a greater share of the global market, the study suggests that Thailand needs to adapt to enhance its competitive edge while also maintaining its status as a major manufacturing base.

Five years will be needed to prepare investment promotion plans, adjust the technology and parts supply chain, update infrastructure, shape personnel skills and create maintenance centres to accommodate future EV demand.

THE RIGHT CONDITIONS

The success of EVs will depend on more than the availability of the vehicles themselves.

Somporn Chui-Aree, an academic at Prince of Songkla University, said driving EV interest demands a holistic approach. This includes everything from road maintenance and traffic reduction to making electricity consumption more sustainable by increasing solar power.

The KRC study estimates that every 10,000 EV units will increase 15,000 megawatts of electricity consumption per year, equal to 0.01% of national electricity use in 2016.

The new Power Development Plan covers electricity consumed by 1.2 million units.

However, Mr Somporn suggests the capacity of variable renewable energy sources, especially solar power from unpolluted sunlight, must be improved to serve the long-term growth of the EV market.

The International Energy Agency's "Global EV Outlook 2016" report said the Paris Declaration on Electro-Mobility and Climate Change and Call to Action sets a global target of having 100 million electric cars and 400 million electric two- and three-wheelers by 2030.

The paper projects an energy system consistent with the emissions trajectory, offering a 50% chance of limiting the average global temperature increase to 2C. It also outlines an even more ambitious deployment pathway for 150 million electric cars by 2030.

"The ambitious greenhouse gas emissions reduction required to limit global warming to less than 2C is unlikely to be achieved without a major contribution from the transport sector," the paper said.

Mr Somporn said, "Technology develops quickly. As a major car producer, Thailand can't avoid this [EV] trend."

A big obstacle facing the government is making EVs more accessible to regular Thai consumers.

They must also create a physical environment conducive to EV growth, including the improvement of urban infrastructure to reduce travel distances.

Education must be developed to create supportive human resources and change consumer behaviour.

"We don't let obstacles block our imagination," said Mr Somporn. "We must keep looking for solutions on how to fix them."

Along for the ride: PM Prayut Chan-o-cha tries out an electric motorcycle at Government House during an EV exhibition. PHOTO: Thanarak Khunton

Charged up: An electric car is charged at a PTT Plc charging station, one of four in Bangkok and its outskirts. The company has joined forces with six carmakers to promote EV development. PHOTO: REUTERS

Take your pick: The electric vehicles exhibition at Government House showcases the latest EV innovations. EVs are being promoted as the eco-friendly alternative the car industry needs. PHOTO: Thanarak Khunton

Steering change: A demonstration of an electric public bus, an alternative to the NGV fuel bus. PHOTO: Wichan Charoenkiatpakul

Press go: A test run of the Japanese-made electric bus prototype. PHOTO: Chanat Katanyu

Manufacturing hub: An assembly line at Honda's new car factory in Prachin Buri, which can build up to 120,000 vehicles a year. Despite a weak first quarter, Honda expects sales to pick up this year. photo: Pattanapong Hirunard

Get smart: A Smart ForTwo Electric Drive is displayed at a Paris car show. photo: reuters

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