Transport is one of the primary contributors to emissions, noise pollution, and climate change. In this part of the world alone, transport in Southeast Asia (SEA) is responsible for 40 per cent of global greenhouse gas emissions and 23 per cent of carbon dioxide[1].

Yet, as the region’s economies continue to grow, sustainable transportation has become a key focus. It is easy to see why: transport and mobility are key drivers of economic growth and employment. For every US$1 billion spent on public transportation in the city, 50,000 jobs are created[2].

And for SEA – a region with a major traffic problem and high levels of transport emissions – to tackle growth in a sustainable manner, it has to look at greening its roads.

This shift is already taking seed. Take Thailand which aims to only sell zero-emission vehicles in the country from 2035 as it works to transform itself from a Southeast Asian hub for the production of conventional automotives to one making electric cars.

Thailand’s electric vehicle (EV) plan[3] is indicative of the region’s bubbling optimism on the growth of sustainable transportation. Indonesia is planning to increase tax incentives for domestically-produced EVs[4] and vying for the spot of top global battery-manufacturing hub.

Elsewhere, the Singapore government has committed S$300 million to EV initiatives in Budget 2021, including enhancing charging networks and revising road taxes. Its Emerging Stronger Taskforce, charged with charting the country’s post-COVID-19 recovery, also released a report in May[5] with recommendations for the country to become the leading global hub for autonomous transport technologies and an early-mover in the global smart mobility market.

Key drivers shaping the future of transportation in SEA

But what are the drivers of this change? From how consumers expect to get around, to their perceptions of vehicles, to vehicle technology and design – everything about mobility may be dramatically different in the years to come. Most significantly, mobility is no longer just an owned asset but a service where user experience is paramount.

Here are three main drivers of change that will continue to evolve beyond 2020, as consumers continue to demand more and governments look to enact new policies:

  1. Consumer and market shifts
    Two main ideas underpin the shifts in consumer preferences today. First, today’s consumers are moving from a situation where they purchase and own an asset to buying a mobility service. More than the product itself, it is about the experience of consuming that service.

    Second, the total cost of ownership to end-users is becoming much more visible and transparent. The purchase price of a car or mobility device is just one part of the equation; when end-users consume a mobility service, the cost of that service is directly linked to the efficiency with which the operator is able to operate the fleet.

    This has led to significant shifts in consumer behaviour over time. Car sales in Asia Pacific saw a 15 per cent decline year-on-year from 2017 to 2020. In South Korea, a recent survey saw 50 per cent of respondents postponing car purchase plans due to car-sharing. Meanwhile, BMW, ElectricBlueSG, HaupCar and GoCar have launched car-sharing programmes across ASEAN countries.

    In congested, metropolitan cities where car ownership is becoming less viable, consumers are turning away from private car ownership towards mobility-as-a-service (MaaS), which integrates private and public transport services on a unified platform. With a single account, consumers can seamlessly plan and manage their trips, tailored to their travel needs for the day. The end-to-end experience is central to the consumer.

    The implication for transportation and mobility companies is that leveraging data and insights to continuously improve the efficiency of MaaS has become a prerequisite for playing in the market.
  2. Regulatory shifts
    Across the world, cities are beginning to institute car-free days, diesel-free zones and reducing vehicle movement in selected areas to promote sustainability and reduce congestion in urban centres. Regulators are brainstorming ways to enable new transportation services, including promoting multi-modal travel to manage shifting consumer demands.

    SEA is no exception. Singapore has introduced EV financial incentives to private owners and businesses, while Thailand and Indonesia are identifying new ways to create battery-manufacturing sectors and establish a stake in the world’s growing market for EV batteries.
  1. Game-changing technology
    The installation of EVs, autonomous vehicles, mobility platforms like Grab and Gojek – none of these would be possible without the advent of new technology.

    By 2025, all new vehicles are envisioned to be connected vehicles. About 40 per cent of them will have embedded telematics, providing real-time insights so that the automotive industry can prioritise user experience in their value propositions.

    The true game changer is expected to come by 2045, when half of newly-sold cars are expected to be partially or fully autonomous – current consumption patterns will be reimagined as drivers become riders, demanding more personalised experiences during transport, such as entertainment or content.

    Countries have started the ball rolling. A joint venture led by Daihatsu and Astra is building a research and development centre[6] in collaboration with the Indonesian government to test and create new technologies, with the aim of powering Indonesia as an automotive hub in the production of Low Cost Electric Vehicles and Low Cost Green Cars, 3D printing of parts, Artificial Intelligence and Internet of Things, and more.
The shift towards Mobility-as-a-Service

No one in the value chain is immune to these shifts. These changes will impact everyone, from car manufacturers, logistics providers, public transport operators, dealerships and maintenance and servicing providers. For transportation-linked businesses to succeed, they will have to improvise, adapt, and overcome.

But change comes with opportunities. First, the blurring of industry boundaries can enable new growth opportunities. Transport will inevitably intersect with other areas, like sustainability (for example, Gojek's ambition to shift to electric vehicles by 2030), entertainment (Apple Electric Car Project) and essential services, like Grab’s COVID-19 vaccination programme aimed at increasing vaccine access.

Secondly, MaaS will be a core differentiator. Consumers no longer just pay for the basic utilities of travelling from Point A to Point B – they demand an exceptional transport experience. Businesses should look to adding value to their services, including content or entertainment for their consumers during their travels.

Finally, there is the heightened need for businesses to include environmental and social outcomes as part of their operations. Besides adapting to consumers’ preference for greener alternatives, sustainability will also translate into practical benefits for transportation companies. For instance, public transportation service providers’ “license to operate”, and the “license to growth” for EV original equipment manufacturers.

An environmental revolution is underway, but Southeast Asia is more than up for the challenge. The next blog post in the series will give a detailed breakdown of what transportation businesses can do to adapt and expand their business operations to cope with the increasing emphasis on sustainability.

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[1] IPCC (https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_chapter8.pdf)

[2] APTA (https://www.apta.com/wp-content/uploads/Hill-Handout.pdf)

[3] Thailand lays out bold EV plan, wants all electric cars by 2035 (https://www.bloomberg.com/news/articles/2021-04-22/thailand-lays-out-bold-ev-plan-wants-all-electric-cars-by-2035)

[4] Indonesia offers more aggressive tax perks for electric vehicles (https://www.bloomberg.com/news/articles/2021-03-15/indonesia-offers-more-aggressive-tax-perks-for-electric-vehicles)

[5] Emerging Stronger Taskforce Report (https://emergingstronger.sg/assets/pdf/EST%20Report_Single%20Page.pdf)

[6] Indonesia: PT Astra Daihatsu to set up R&D Centre (https://www.automotiveworld.com/articles/94910-indonesia-pt-astra-daihatsu-to-set-up-r-d-centre/)

Jurgen Coppens

Managing Director – Strategy & Consulting, Sustainability Lead, Southeast Asia

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