Southeast Asia is home to some of the world’s most congested cities. Whether you’re in Bangkok, Hanoi, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila or Singapore, the traffic in any of these cities is congested and comes to a crawl throughout the day, leading to extra hours on the road for drivers and an unhealthy environment from the air pollution that’s prevalent in these cities.
Southeast Asia’s economic success and rapid economic growth have led to all major cities across the region experiencing traffic congestion and cancer-causing air pollution because of the adoption by middle and upper-income consumers of gasoline powered cars.
As family incomes rise, many people first buy motorcycles for their personal use and then upgrade to cars as their income levels increase. Although the idea of motorcycles for individuals seems more attractive than automobiles, many of the Japanese motorcycles that are sold in Southeast Asia have pollution emission standards that are quite low and would ban them from being sold in Japan, Europe or the U.S.
A typical Southeast Asia traffic jam
Across the region, automobile congestion is leading to more time in traffic and market research shows that people in Bangkok, Hanoi, Ho Chi Minh City, Jakarta and Manila spending more than 1-hour a day idling in traffic. In Singapore, which is considered one of the best cities for traffic movement, people are now spending 20 ~ 30 minutes per day in traffic.
In Ho Chi Minh City, government officials announced that they are issuing an average of 750 new motorcycle licenses everyday, leading to 200,000+ new motorcycles on the city’s roads each year. Because of the growing congestion in HCMC’s district 1, the central business area, authorities are now considering banning motorcycles in the district during the day.
This scenario is being looked at in metro cities across the region, but most consumers say that the city buses are dirty, drivers are discourteous and time schedules are inaccurate, while taxis and ride-hailing services are too expensive, while the building of subway and railway lines are too expensive and take too long to have an impact.
Are electric vehicles (EV) and “micromobility” solutions the answer? Micromobility refers to travel of less than eight kilometers, and as Uber’s CEO said, “During rush hour, it is very inefficient for a one-ton hulk of metal to take one person 10 blocks. The reality is that most people don’t need to be driving cars every day, because usually they just need to travel short distances to and from work, school, or shopping malls.”
A report by market research company, CB Insights showed that 60% of trips in the USA are less than five miles in distance and can be replaced by micromobility solutions such as electric bikes and scooters. Within Southeast Asia’s megacities the percentage of people traveling for short trips is even higher.
Grab electric scooters used by students at an Indonesia university
While electric cars and automobiles that are self-driving and powered by Artificial Intelligence (AI) it’s actually the electric scooter that has the ability to create the most meaningful impact for Southeast Asia within the next few years.
Electric scooters are inexpensive with an average retail cost of $100 ~ $500 USD per scooter, although “premium” scooters can cost $5,000 USD or more. Most scooters can be easily charged at any electrical socket, or have removable batteries that can easily be swapped out.
The increased durability of electric scooters, along with improvements in battery technology, and charging efficiency, means that electric scooters will have increased ranges and many people in Southeast Asia will be able to change from gasoline scooters to electric scooters and will save costs and help to decrease pollution in their cities.
E-scooters can be more than 100x more efficient than gas vehicles
Wired Magazine did an analysis of energy efficiency and reported that one-kilowatt hour of energy allowed traditional gas automobiles to travel 1.3 kilometers, while electric automobiles traveled 6.6 kilometers on the same energy, an increase in efficiency of 5x.
Electric scooters on the other hand, could travel 133 kilometers on the same amount of energy – 20x more efficient than electric cars and 102x better than traditional gas-powered cars. Additionally, because of their smaller form factor, electric scooters also reduced traffic congestion.
A Japanese mother uses an e-bike to take her kids to school
McKinsey, the global consulting company has also studied electric scooters and found that an electric scooter could pay for itself in only four months and represents the most cost-effective form of transport for short distances.
Lime, the US micromobility company that specializes in electric scooters rentals, e-assist bikes and pedal bikes said that 30% of their riders replaced an automobile trip with an electric scooter ride and 27% of their riders in urban cities used an electric scooter to connect to public transportation.
Lime e-scooters in Singapore
CB Insights reports that countries in Asia are experiencing similar adoption trends and that shared bikes are now the third most popular mode of public transportation in China. Other countries in Asia like Singapore, and South Korea and Taiwan have also seen strong consumer use as their countries have allowed micromobility solutions to take hold.
However, for electric scooters and bikes to be adopted across Southeast Asia there will still need to be improvements in the durability of bikes and scooters and they will have to prove that they can survive the tough road and weather conditions that are a part of this region.
Chinese company, Niu Technologies, which is listed on the US NASDAQ, is a producer of electric scooters. According the company’s research, it expects Southeast Asia’s electric bike and scooter market size to expand to $2.5 billion USD in annual revenue in 2022.
Southeast Asia has many unique environmental factors and its not yet clear whether Chinese or Japanese companies will be the winners in manufacturing and supplying electric bikes and scooters for the market. Japanese motorcycle manufacturers are considered to be lagging behind in electric bikes and scooters since they’re focused on their gas-powered vehicles. Chinese manufacturers have been adept at creating city bikes but they haven’t produced electric vehicles for Southeast Asia’s particular requirements of higher speed and range, plus the durability for their vehicle to manage heavy rains and hot climates.
Electric scooters and bikes, and the concept of micromobility represents solutions to the problems of traffic congestion and air pollution across the region and also represents a multi-billion dollar revenue opportunity for innovative new companies.
Vinfast electric motorcycles in Vietnam
In addition to Chinese and Japanese manufacturers, there are regional players emerging such as Viar in Indonesia, Scorpio Electric in Singapore and Vinfast in Vietnam that are all moving forward in manufacturing electric vehicles for their markets.
Whether these companies will focus on only manufacturing, or whether they will also expand their businesses to become providers of micro-mobility solutions remains to be seen, but we can look forward to a number of announcements and moves by these companies and others during the 2020 ~ 2023 time period.