Electrification - is it a sprint or a marathon?

This article was taken from just-auto.com . Read the original article here: https://www.just-auto.com/comment/electrification-is-it-a-sprint-or-a-marathon_id200293.aspx

In this part of the world, a large part of the motoring discussion has emerged about the electrification of Malaysia's automotive landscape.

There are two aspects of this: the first, a consumer perspective - in which the discussion centralises around incentivising consumer interest in using electric powered vehicles. The second, is about the ability to manufacture such vehicles with electric based powered trains.

The excitement within the community is definitely encouraging, as well as insistent - in relation to the speed of our progress in electrification.

Before we speak of Malaysia's electrification efforts, let us put the subject matter in context of global developments.

Currently, the country with highest sales of light duty plug-in EVs is China, followed by the United States (or we can place the entire European continent as the second highest). However, when calculated on a per capita basis, then Norway, Sweden and the Netherlands emerge as nations with significantly higher levels of EV penetration.

Interestingly, while Japan and the United States have long been established as among the largest vehicle manufacturers in the world, they have not emerged as the largest EV manufacturers or consumers.

At this point in time, the "race" towards electrification is not a short sprint to the finish line, but a long-distance journey that provides a place for strategic thinking, careful planning and internal development.

This in no way means we should take our time, but the field places a premium on calculated decisions based on predicted trends, and developing strategically targeted goals that work true to our comparative advantage.

Despite its large population, many of the ASEAN nations still hold a lower motorisation rate compared to other regions such as Europe and East Asia (with Malaysia one of the few exceptions). This makes vehicle assembly investment within the region a somewhat tricky proposition, as low motorisation despite dense population puts a strong demand on exportability, in which CBU competitiveness is subject to geographic factors in surrounding market forces.

The lower electrification rate within the region adds to the complication, which means investment in mere assembly of vehicles may pose some risk, despite intentions of such ventures getting massive public attention.

This means that from a geographical standpoint, ventures in electro-mobility sub-assemblies and components may prove a more prudent start for investors within the region. This would explain the tremendous growth of exports of parts and components from Malaysia, which totalled RM13.1 billion in 2019 as the country pushed for development in this area of the industry (since the NAP2014).

The current National Automotive Policy (NAP2020) stipulates the development of critical components and systems for NxGVs, MaaS and Industry 4.0, including systems and components within AACVs, Industry 4.0 technologies, light-weight material technology as well as hybrid, electric and fuel-cell vehicles.

It also outlines measures such as standards and regulations, strategic collaboration, funding and infrastructure development of technology for various types of vehicles, and will be implemented over three phases between 2020 and 2030.

South Korean manufacturer, SK Nexilis recently announced a RM2.3bn investment in copper foil production plant has proved a great start for the policy, particularly in the area of EV critical component production.

At the same time, the town of Cyberjaya currently hosts numerous companies gearing towards development of technology with the domains of next generation vehicles, including EVs. The area is earmarked as a test-bed for autonomous vehicles and its relevant components.

Incentivising the consumer to overcome its EV anxiety is Malaysia's immediate challenge, as it overcomes its fossil-fuel dependence, at the pump as well as the power generator.

Several initiatives have been implemented through private-public initiatives such as vehicle sharing schemes, as well as EV bus routes emerging in test-beds within the Klang Valley and the city of Kuching.

More direct incentives for both consumers and manufacturers are currently being discussed – and the fact that the subject of EVs have been discussed continuously in the news shows that there is more excitement to come in the near future.

The writer is the chief executive officer of Malaysia Automotive, Robotics and IoT Institute

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