How to build an e-mobility ecosystem across Southeast Asia

Our recent update on the fast-growing electric mobility segment in Southeast Asia took a close look at the surge and potentially far-reaching impact of e-mobility solutions and services in the region. This article focuses on what it takes to select and support early-stage innovators across the value chain to create a thriving, sustainable e-mobility ecosystem in each market.

Adopt a holistic yet market-specific approach.

To unlock the full business and impact potential of e-mobility – and accelerate innovation and growth – it will be essential to support the entire value chain rather than a limited number of sub-segments. From electric vehicle manufacturers, charging stations and longer-range batteries to battery-swapping technologies and fleet operators, a comprehensive ecosystem will be instrumental to increasing e-mobility adoption. Given the diversity of the region, however, the players will vary and evolve by market.

In India, for example, the e-mobility ecosystem has recently undergone substantial development. As Kewal Shah, Mumbai-based responsAbility investment officer, explains: “Most e-mobility companies in India began incubating in 2016, but we have seen more traction over the past two to three years. Today, there are more than 700 start-ups in this space. This is why it’s interesting to look at India to understand the kind of scale, size and potential that the segment could have across the whole region.”

Identify local-market drivers.

While India may provide a glimpse into the future, each market must be evaluated independently. The battery-swapping business models that have emerged in India, for example, could prove more popular in a smaller Southeast Asian nation given the high proportion of two- and three-wheeler vehicles. To determine where investments could have the greatest impact, it is important to assess each business model and technology with an open mind and a systematic approach. This involves a detailed examination of the mobility landscape, infrastructure, regulatory framework, and economic roadmap of the country, as well as critical input from both technical and market experts. Such work takes time and effort, but it is indispensable for understanding how the e-mobility sector could potentially scale up.

Prioritize quality and innovation.

For many customers in Southeast Asia, e-mobility decisions are based more on cost efficiency than sustainability. Fortunately, the improved quality of e-mobility products allows them to compete with traditional modes of transport. Customers can now make an economic decision to adopt e-mobility solutions instead of feeling pressured into using an inferior product for sustainability purposes alone. This heightened and hard-won acceptance of e-mobility solutions underscores the vital need for continuous improvement and innovation across products, the value chain and production systems.

Given the current momentum behind the segment, many companies may be tempted to launch products quickly and pay less attention to quality in the aim of achieving a better time to market. However, if electric vehicles fail or battery performance does not meet expectations, the diminished trust could be a significant setback for the e-mobility sector (and other sustainable mobility sectors). It would take time as well as widespread re-education on e-mobility benefits to win back customer confidence. In effect, products of inferior quality could be the most significant impediment to the growth of this emerging sector.

Determine key investment criteria for early-stage companies.

A sound investment thesis will always depend on technical studies, market studies, business model studies and ESG assessment. While it might be easier to invest in the largest business groups in each country and task them with improving e-mobility, the future of this sector is already being shaped by early-stage innovators. The main challenge now lies in identifying high-potential companies in each market and helping them thrive.

To ensure the support of superior companies with high-quality products, potential investors should dedicate considerable time to due diligence upfront. As cross-sector experience shows, the early-stage companies that often prove to be economically sustainable share three common attributes:

By focusing on both the individual companies and local-market dynamics, investors are better equipped to identify promising early-stage e-mobility companies – and provide the necessary support for their development. This approach takes time but will likely help to promote innovation, foster competition, and contribute to the overall growth of the e-mobility sector.