The Growing Electric Car Market in Emerging Markets

China, Europe, and the United States are the major markets for electric cars, accounting for about 95% of global sales in 2022. However, emerging market and developing economies (EMDEs) outside China account for only a small fraction of the global electric car market. One of the main challenges facing the adoption of electric cars in these countries is the high cost of electric cars, which remains too expensive for the majority of the population. Lack of access to reliable and affordable charging, as well as limited access to EV servicing, maintenance, and repair, can also be barriers. In most EMDEs, road transport is still largely based on smaller mobility solutions in urban centers, such as two- and three-wheelers, which have seen greater success in terms of electrification, as well as shared mobility for regional commutes.

Published

May 2023

Industry

Electric Vehicles

Despite the challenges, there has been a notable boom in electromobility in some EMDEs. For example, in India, BEV sales reached nearly 50,000 in 2022, 4 times more than in 2021, while total car sales increased by just below 15%. In Thailand, electric car sales doubled to 21,000, and in Indonesia, BEV sales multiplied by more than 14, exceeding 10,000.

In India, the government’s Production Linked Incentive (PLI) scheme has attracted investments totaling USD 8.3 billion to ramp up EV and component manufacturing. The Indian market, however, is currently geared towards shared and smaller mobility. Ola, India’s top EV company by revenue, aims to double its electric two-wheeler manufacturing capacity to 2 million by the end of 2023, and to reach an annual production capacity of 10 million between 2025 and 2028. The company also seeks to build lithium-ion battery manufacturing facilities, initially at 5 GWh capacity, scaling up to 100 GWh by 2030. Ola aims to start marketing electric cars for its taxi business by 2024 and to make its fleet of taxis fully electric by 2029, while launching its own electric car business for both the high-end and mass markets.

In Thailand, the emerging presence of Chinese carmakers has accelerated EV adoption in the country. Chinese original equipment manufacturer (OEM) Great Wall Motors launched its Ora Good Cat BEV model in the Thai market in 2021, and in 2022 it became the most sold electric car in Thailand, with nearly 4,000 sales. Chinese automakers were able to undercut EV prices from foreign competitors also present in the Thai market, such as BMW and Mercedes, thereby appealing to a broader consumer base. In addition, the Thai government offers various financial incentives for electric cars, including subsidies, excise duty waivers, and import tax reductions, which have contributed to making electric cars more attractive.

In Indonesia, the government announced new incentives in March 2023 to support sales of electric two-wheelers, cars, and buses, with the aim of strengthening domestic capacity in EV and battery manufacturing through local component requirements. The government aims to subsidize the sale of 200,000 electric two-wheelers and 36,000 electric cars in 2023, reaching a sales share of 4%.