Electric vehicles (EVs) are gaining rapid momentum as a mainstream mode of transportation, particularly in Asia, where the trend is rapidly accelerating. With China accounting for approximately 65% of all EV sales in 2022, the global shift toward electrification is unmistakable.
The Global Push for EV Adoption
The transport sector contributes about 17% of global greenhouse gas emissions, making the widespread adoption of EVs critical for countries to meet national emissions goals and contribute to the global 1.5-degree climate change target.
While the case for consumer transport electrification is compelling, it's crucial to acknowledge the risks and challenges associated with embracing this new technology.
Regional Commitment to EVs
Several Southeast Asian countries, including Singapore, Indonesia, Malaysia, and the Philippines, are committed to accelerating the adoption of electric and hybrid vehicles within the next decade. These ambitious targets reflect the growing consumer desire to embrace EVs as a sustainable mode of transportation. However, accessibility, convenience, and price remain significant concerns for potential buyers.
The Philippine government has proactively facilitated the transition to EVs by offering incentives to promote investments in the industry, including VAT exemption. The Electric Vehicles and Charging Stations Law (EVIDA) aims to reduce the country's dependence on fossil fuels, lower greenhouse gas emissions, and promote the development of a sustainable transportation system.
Incentives such as VAT exemption, specialized EV license plates, tax breaks, and reduced registration fees make EV ownership appealing. Additionally, EVs are around three times more cost-effective than conventional internal combustion engine (ICE) vehicles, offering significant savings for users. While there are significant incentives for EV adoption, potential buyers should be aware of the risks associated with purchasing and owning an electric vehicle.
Risks Associated with Owning an Electric Vehicle
Limited Range and Battery Replacement Costs
One of the drawbacks associated with driving an EV is the limited range and potential battery replacement costs. Towing can also drastically reduce the range of some electric vehicles, which may not be suitable for individuals who regularly tow heavy loads.
Charging Infrastructure
Electric cars rely on charging infrastructure, and the limited public charging infrastructure can be a concern for potential EV owners. However, it is expected that the public charging infrastructure will improve in the coming years.
Higher Purchase Price
Electric cars can be expensive to purchase compared to traditional internal combustion engine (ICE) vehicles. The initial purchase price of an EV may be a deterrent for some potential buyers.
Heavy Vehicle Weight
Electric cars tend to be heavier than traditional vehicles, which can have implications for handling and overall performance.
Personal Lifestyle Changes
The adoption of electric vehicles may require changes to personal lifestyles to achieve climate goals, which could be a consideration for some potential buyers.
Insurance Considerations
Insuring EVs may incur higher costs compared to traditional gasoline vehicles due to their higher costs. Moreover, the relatively recent introduction of EVs in the Philippines means that some insurance companies may have limited experience with them, potentially resulting in higher premiums.
As the EV market continues to grow in emerging Asian markets, it's crucial for consumers to understand the risks and protection associated with owning an electric vehicle. With the development of EV ecosystems progressing rapidly, consumers and developers in Asia must be proactive in addressing the risks and challenges of EV ownership while also seizing the opportunities to contribute to a sustainable transportation future.
For more information about the risks and protection for electric vehicles, visit our website (opens a new window) or contact us for further information.
E: info.philippines@lockton.com (opens a new window) (Philippines)
