EVs Gain Momentum in Southeast Asia: Are They as Green as They Seem

By Rachel Kong | 3Q 2024 | IN-7502

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Automobile companies are increasingly targeting Thailand and Indonesia as prime locations for Electric Vehicle (EV) manufacturing due to their rich natural resources and market competitiveness. In July 2024, Indonesia unveiled Southeast Asia's "first and largest" EV battery plant, a joint venture between Hyundai and LG Energy Solution, leveraging Indonesia's abundant nickel, bauxite, and copper reserves essential for the production of EV batteries. Meanwhile, Chinese automaker BYD has established an EV plant in Thailand to tap into the region's rapid growth. Similarly, Changan Automobile is set to launch its first Southeast Asia EV manufacturing facility in Thailand in early 2025.

These trends are accelerated by government tax incentives and subsidy policies. Thailand plans to transition around 30% of its annual vehicle production of 2.5 million units into EVs by 2030. Likewise, Indonesia aspires to become one of the top three global producers of EV batteries by 2027 as part of its industrial strategy. The rise in manufacturing plants and EV production is expected to boost the adoption of EVs across Southeast Asia due to cost reduction and increased availability.

It has been claimed that EVs emit less Greenhouse Gases (GHGs) and have zero hydro-carbon derivative and nitrogen-related tailpipe emissions. However, they may not be as environmentally friendly as they appear. Assessing the sustainability of EVs involves examining various factors, including the supply chain of production and the regulations of each country.

• Emissions Involved During Manufacturing: While EVs have an ultra-low carbon footprint during operation, the manufacturing process for EVs, however, does produce significant amounts of GHG emissions. The production of EV batteries makes up 40% to 60% of embedded GHGs emissions, as they contain nickel, manganese, cobalt, lithium, and graphite, which can contribute to high levels of GHGs during the mining and refining stages of production.
• Electricity for Charging of EVs: The generation of electricity that is used to charge the lithium ion batteries of EVs is another source of GHG emissions, as approximately 80% of electricity generated in the Association of Southeast Asian Nations (ASEAN) region comes from non-renewable sources like natural gas and coal.
• Tropical Climate Affects Battery Performance and Longevity: The Southeast Asia region experiences heat and humidity, along with monsoon seasons and flooding, as part of its tropical climate. Under such conditions, lithium batteries tend to degrade faster than expected, resulting in shorter life spans, and thereby more frequent replacements.
• Low Recycling Rate and Regulations of EV Batteries: Many countries in Southeast Asia still experience low recycling rates and/or have not established adequate regulations to enforce EV battery recycling. For example, in Singapore, EV and hybrid vehicle batteries account for only 1% of e-waste recycled under the Extended Producer Responsibility (EPR) scheme. Indonesia has regulations for hazardous waste management, but they are incomplete and not reliably enforced. Meanwhile, the Malaysian government is still in the process of developing guidelines for the disposal of EV batteries to address environmental concerns.

As EV adoption increases in the region, managing battery waste and ensuring cleaner manufacturing processes will need to become a greater priority. In addition to ongoing efforts by countries to achieve their net-zero and sustainability targets, further actions can be taken:

• Switching to Renewable Charging Stations: Most EV charging stations get their electricity from the power grids, which rely largely on fossil fuels. Countries could build more renewable charging stations with electricity generated from solar power. For example, in Singapore, three service stations are providing EV charging using 100% certified renewable energy, including energy from solar panels on station rooftops. These solutions, with their own standalone energy infrastructure, could be implemented in other countries, as well for a cleaner energy value chain.
• EV Battery Technology Innovation: Originally, EV batteries were composed of metals such as Nickel, Manganese, and Cobalt (NMC). Newer technology now features Lithium Iron Phosphate (LFP) batteries, which offer a longer life span and lower risk of overheating. Additionally, sodium-ion batteries are being developed, which are better suited for shorter-range EVs and plug-in hybrids. In Southeast Asia, EVs could adopt more LFP batteries to combat the region's higher heat and humidity challenges, which heightens the risk of the battery overheating. Furthermore, this solution must be accompanied by additional and more effective charging infrastructure. Charging times need to come down.
• Recycling Initiative Investments: Southeast Asian countries must support the establishment of more EV battery recycling firms in their respective countries. For example, in Singapore, battery recycling companies TES Singapore and Se-cure Waste Management are preparing to build new plants in response to the expected surge in the EV population. These new facilities will be equipped to repurpose EV batteries for second-life applications, aiming to reduce e-waste. Other countries should implement similar solutions with government support such as subsidies and grants to achieve their sustainability objectives.
• EV Waste Regulation Enforcement: Southeast Asian countries need to establish appropriate regulations and policies for EV battery recycling. In this regard, some positive developments have been observed. For example, the Indonesian government is working on establishing comprehensive recycling regulations specifically for EVs. Additionally, the Thailand Automotive Institute has signed a Memorandum of Understanding (MoU) with Better World Green to develop EV disposal methods that comply with international standards and laws. Governments and regulators will need to move quickly to keep up with international regulations and technological developments.