Employees work at Tesla’s gigafactors in Shanghai, in eastern China, on November 20, 2020.
Ding Ting | Xinhua News Agency Getty Images
China is the largest player in the Asian electric vehicle market – but the region still lags behind Europe, according to an analyst at research firm Fitch Solutions.
Asia is lagging behind because European governments are taking strong measures to boost growth in the sector, said Anna-Marie Baisden, head of automotive research at Fitch Solutions, in an interview with CNBC’s “Squawk Box Asia”.
“The region is playing catch-up. When we talk about the Asian EV market, we’re mostly talking about China, which still accounts for about 90% of sales,” Baisden said.
“But there are many supportive policies that have been implemented in Europe, especially in the EU, over the past year in response to the coronavirus … both on the infrastructure side and at the national level in terms of incentives,” she said.
Report by consulting firm Cairn Energy Research Advisors focused on the battery and electric vehicle industry, predicted last year that in 2021 there will be an increase in sales of electric vehicles. He’s coming while countries around the world are forcing new programs to encourage consumers to buy battery-powered vehicles.
The report also said the biggest sales growth for the sector will be recorded in Europe, mainly because EU governments are committed to reducing carbon emissions.
Baisden said the weak reception of electric vehicles in Asia – mainly in countries like Japan and India – is due to a combination of factors.
Although there is basic demand in Japan, “we are still waiting for concrete incentive plans,” she pointed out. “We heard in January that there are plans to start issuing cash incentives to buy locally, especially with the goal of having Tokyo have all electric car sales by 2030.”
As for India, the electric vehicle sector is likely to get a boost from electric car maker Elon Musk Tesla.
According to Reuters, the US firm founded Tesla Motors India and Energy Private Limited in February with headquarters in the Bengaluru technology hub in Karnataka.
Although South Asia’s largest economy has huge potential to boost growth in the electric vehicle market, the country’s demographics could pose a serious challenge, according to Baisden.
“There are support policies and manufacturers are starting to move that way with locally produced cars. But the demographics are different,” Baisden noted.
“It has a much lower average income than other Asian markets. There is a lot of potential there, but it really comes down to demographics in India,” she added.