The impact of Generative AI is everywhere — just take a look around.

If you look past ChatGPT, you see products like Adobe Photoshop incorporating it into their tools. Want a lighthouse in your desert photograph? Generate it. Want to know what Harry Potter would look like in anime form? Generate it.

Your productivity note-taking app will summarise your notes for you, edit your writing tone, fix your grammar. Your mobile-phone will generate text-to-speech in the likeness of your own voice.

Beyond everyday consumer use, Generative Artificial Intelligence (Gen AI) is proving its potential to be enormously helpful. For pharmaceutical companies, Gen AI could design proteins for medicines, which will solve a massive challenge that has plagued geneticists and pharmaceutical developers for decades. In manufacturing, Gen AI can create machine parts and optimise design to minimise waste and increase speed and efficiency.

In fact, Gen AI could be the invisible hand that shapes what we interact with in the world around us —designing the buildings we work and sleep in, the parks we walk our dogs in, and the roads we commute upon.

Collaboration between humans and artificial intelligence (AI) is more impactful than it has ever been before. While the AI of the past was stagnant — you make a request, and whatever the AI outcome is, you take it or you leave it. With generative AI, there is back and forth to refine and redefine continually. This is collaboration in order to achieve specific results.

With Gen AI, be intentional with risk-taking

That is the key to Gen AI of the present – collaboration. It will take immense collaboration to mitigate the tidal wave of risks involved with generative AI. As we are discovering the capabilities of Gen AI in our everyday lives, we need to have data privacy, algorithmic bias, explainability, fairness, and accuracy on our radar.

Also Read: The Future of CRM: Transforming customer experience with Gen AI

It is almost certain that there are dangers we have yet to fathom. After all, we do not know what we do not know.

We will need true collaboration with fellow humans to ensure Gen AI will serve the good of society and be used as ethically as possible. As with any powerful, potentially dangerous tool, like cars and weapons, AI should be strictly regulated with frameworks to guide responsible development and deployment.

In March 2023, after calls by over 1,000 tech workers for a pause in the training of the most powerful AI systems, UNESCO called on all governments to fully implement its Recommendation on the Ethics of Artificial Intelligence immediately. The organisation argued that “industry self-regulation is clearly not sufficient to avoid ethical harms.”

The future of generative AI depends on how we behave today

A very real and conspicuous controversy shrouding Gen AI is how it is impacting jobs. Already, artists are using AI art generators, and writers and creators everywhere are disgruntled, anxious or apprehensive about Gen AI.

Stability AI’s Founder and CEO, Emad Mostaque, is convinced that AI will “create brand new industries”, which will “create loads of new jobs.” While that might be true, current jobs are already being displaced.

We need to be very careful. This phenomenon of technology displacing jobs is nothing new—people have argued that machines have been taking their jobs for decades now, but generative AI is growing at a furious pace, and the world is enamoured by it.

Currently, its main victim seems to be the creative industry, one of the few industries where everyone actually wants to do their job. It will be a bleak place if we replace the artists of the world with artificial intelligence.

Instead, we need to make sure AI pushes all of society forward. To replace mundane tasks to free up time for more meaningful work. To solve problems, we could not before. But it is not something that artificial intelligence can achieve on its own.

Also Read: Collaboration and a sense of urgency: What it takes to support climate tech startups in Southeast Asia

What it needs as guidelines is intentional, radical collaboration between humans. A shared understanding of what AI should be used for and how it should be used.

Education with collaboration

In order for this collaboration to happen, we will need mass education to prepare individuals for the future of work. Organisations like SGTech and SkillsFuture could collaborate and develop courses that introduce basic AI knowledge for people in all stages of life and their careers, and how they might use it for their benefit.

In order for Singapore to stay ahead of the curve, we need to learn fast. The Gen AI era is here to stay, and will only evolve and grow. To make sure our futures are bright, we will need collaboration that is regular, institutionalised, and designed with purpose.

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The race towards net-zero emissions is intensifying, and electric vehicles are at the forefront of this green revolution. Imagine a future where Southeast Asia’s bustling cities are powered by clean energy, with electric vehicles (EVs) zipping silently through the streets, reducing pollution and dependency on fossil fuels.

This vision is becoming a reality. As Southeast Asia gears up to embrace this change, investors have a unique chance to capitalise on a market poised for explosive growth and innovation.

The Electric Vehicle ecosystem involves a diverse network of stakeholders, including original equipment manufacturers (OEMs), charging infrastructure providers, battery swapping services, fleet management companies, and other related services.

When investors express interest in the EV sector, it’s essential to understand precisely where they are directing their investments. Choosing the right focus area within this complex web is crucial for success in this rapidly evolving industry.

Globally, the demand for EVs has been rapidly increasing. Sales rose by about 30 per cent in 2023, and while this is slower than the impressive  54 per cent growth observed in 2022, the market continues to evolve with strong momentum. Projections indicate that EV adoption will reach 86 per cent by 2030, more than double the 40 per cent previously projected in April 2023.

Also Read: Infographic: A visualisation of Indonesia’s electric vehicle transition

Several driving forces contribute to this rapid ascent:

• Government policies: Governments around the world are announcing a growing number of net-zero targets to meet the commitments of the Paris Agreement, which has trickled down to decarbonising the transportation sector.
• Product variety and quality: There are now a variety of EV options with more designs, better quality, and longer range, especially from manufacturers in China, the US, and Europe.
• Technological advances: Competition among global players has driven costs down. The cost of lithium-ion batteries, which make up about 40 per cent of EV production costs, has plummeted by 97 per cent since 1991 and is expected to continue to fall by an average of 11 per cent per year through 2030. Demand for batteries remains high, prompting a surge in battery manufacturing plants worldwide.

Few sectors today enjoy such strong macro tailwinds. Many global private and public investors have profited from the IPOs of Tesla, XPeng, Nio and BYD. Yet, we are still scratching the surface as global EV penetration is still relatively low, accounting for somewhere between 14 and 18 per cent of car sales in 2023.

The good news is that investors in Southeast Asia can still benefit from the growth of the EV sector. While the adoption in Southeast Asia is still in its infancy and lower than the global standards, there exists a delicate balance of investment opportunities and challenges.

Some of these opportunities include:

• Abundance of raw materials: The region is well-positioned to become a strong EV supply market given the availability of raw materials in the region. Indonesia is home to 22 per cent of world’s nickel reserves, a crucial material for EV battery cathodes.
• Large market potential: The region’s growing 690+ million population, with over 240 million motorised two-wheelers (2w) and 75 million cars (4w) represents a significant and attractive market.
• Government Incentives: All Southeast Asian governments have set goals and incentives for EV adoption, ranging from tax breaks, exemptions from odd-even plate rules, and reduced fossil fuel subsidies (although the success rates differ from country to country).

On the flip side, there are also mounting challenges facing the region:

• Market fragmentation: The fragmentation of the markets meant that we were unlikely to enjoy the economies of scale to rival that of China and the US.
• Manufacturing expertise: The region faces a disadvantage compared to global competitors due to a lack of expertise in EV manufacturing and supply chain management.
• Charging infrastructure: A severe lack of charging infrastructure is unable to assuage range anxiety for long distance driving, hampering EV adoption.

To navigate these opportunities and challenges, let us deconstruct the EV ecosystem into three key areas:

• Original Equipment Manufacturers (OEMs)
• Infrastructure
• Services and enablers

Original Equipment Manufacturers (OEMs)

EV OEMs are companies responsible for designing, producing, and assembling essential components of EVs. These components include batteries, electric drivetrains, chassis, charging systems, and other parts crucial for functionality and performance. They can be broken down further in 4W and 2W of which the latter has seen very strong interest from regional investors.

Also Read: The growth of electric vehicles is saving the planet, one trip at a time

Some notable examples of 2W in the region include DatBike, Edde Rides, Charged Asia, Electrum, Volta, & Alva. While various business models exist, OEM operations are generally capital-intensive – manufacturing EVs and managing the supply chain require substantial investment. Unlike Internal Combustion Engine Vehicles (ICEs), EVs have fewer moving parts. Consequently, the sector has lower barriers to entry, leading to a proliferation of 2W EV brands in Southeast Asia.

Winning and dominating the market are likely to be determined by several factors, including a differentiated brand and design that resonates with Southeast Asian aspirational consumers, the broadest coverage of distribution and accessibility, superior product performance and driving and riding experience, and the most efficient manufacturing and supply management.

Infrastructure

EV infrastructure encompasses essential structures, machinery, and equipment to support EV adoption. This includes charging stations, battery swapping facilities, and end-of-life battery recycling. Investment in this sector tends to be capital investment-intensive, especially in battery leasing and swapping services where working capital plays a significant role.

While the technology is reaching maturity, digital tools, software, and data would enhance operational efficiency. Success hinges on securing financing from deep-pocketed funds (such as infrastructure funds or bank debt) and executing its business plan flawlessly.

For instance, in the competitive landscape of charging infrastructure and battery swapping, players like Eboost and Tiger New Energy must secure prime real estate locations, establish strong partnerships with utility providers and local governments, invest in skilled manpower for operations, maintenance and security, and potentially explore franchising models to scale. In battery recycling, securing proprietary feedstock channels at competitive prices will become a critical differentiator.

Services and enablers

EV services and enablers, a lighter facet of the EV ecosystem, encompass a wide range of offerings and support systems aimed at facilitating the adoption, maintenance, and efficient use of electric vehicles. These services span various areas, including logistics (leveraging EV fleets), vehicle servicing, battery intelligence systems, fleet management (both software and know-how), and financing/leasing.

A critical differentiator for EVs, compared to ICEs, lies in their data-integrated telematics capabilities. EVs generate substantial driving, performance, and telematic data during operations, which presents exciting opportunities.

For instance, battery performance data could revolutionise EV underwriting, creating a secondary market for the industry. Insurance premiums could be tailored based on drivers’ behaviour, and resale values could vary depending on vehicle ownership. Logistics companies like APX, Mober, Dash, and Blitz can track driver/rider behaviour and performance, incentivising better delivery outcomes.

Observations from our 10 months of analysing the Southeast Asian EV market reveal compelling investment opportunities. Many venture capitalists and infrastructure investors in the US, Europe, and China have already reaped rewards. Favorable macroeconomic and regulatory conditions, increased EV choices, cost parity with internal combustion engines (ICEs), improved charging infrastructure, and growing consumer awareness drive this trend.

However, challenges persist: Southeast Asia lags in manufacturing know-how, talent availability, and fragmented markets. Investors must also choose their focus, given the wide variety of ecosystems that present different risk/reward scenarios.

From a climate perspective, we also have to bear in mind that the only way to get to zero-emission driving is to decarbonise the grid, even with breakthrough EV penetration, Southeast Asia’s grids still rely on coal, fossil gas, and other polluting fuels, a significant issue that must be addressed.

The Radical Fund is seeking business models that are capital-light while delivering a twin strategy of scaled commercial and climate impact. Please reach out to us for feedback or comments to share regarding the EV industry in Southeast Asia.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join our e27 Telegram group, FB community, or like the e27 Facebook page.

Image credit: Canva

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