Electric scooters are not only cheaper but they also are a more environmentally-friendly means of commuting

So you’ve made it in Southeast Asia! Your family is wealthy after years of economic growth and rising incomes! Sitting in your Mercedes S Class, you snap selfies dressed in designer clothes while listening to music on Spotify from your iPhone… life couldn’t be better? But wait, actually there are two big problems. Firstly, your Mercedes is stuck in gridlocked traffic. Secondly, you’re inhaling carcinogenic chemicals daily from polluted city air.

Such an experience represents the unfortunate irony of Southeast Asia’s economic success. While the region’s GDP and income levels have risen dramatically thanks to rapid economic development, it now suffers from crippling traffic congestion and cancer-causing air pollution even the wealthy can’t avoid.

The key culprit? Gasoline-powered transport. As family incomes rise, we all first buy motorcycles which we later upgrade to cars as we become even wealthier. Did you know that most of the Japanese motorcycles sold in Southeast Asia would never be allowed for sale in Europe, the US, or even Japan for that matter? They are too polluting; we get the dirtier motorcycles because emissions standards are much lower in most Southeast Asian countries for motorcycles (except Singapore).

Also, given Southeast Asia’s tendency to develop megacities with high population density, the transport lifestyle that works in less densely populated parts of Europe or the USA just don’t work out here. Everybody can’t own a car in Jakarta, Bangkok, Manila, or Ho Chi Minh without creating snarling traffic and horrendous pollution.

As shown in the tables below, residents of Bangkok, Jakarta, Manila, and Hanoi waste about an hour or more in traffic every day. Even Singaporeans waste 30 minutes per day in traffic. Just searching for parking wastes another 20 minutes or more for most Southeast Asian city dwellers.

 

What’s the point of economic wealth if you have to breathe dirty air and waste hours a day stuck in traffic? It’s a disaster.

Thankfully, a confluence of two technology trends, electric vehicles (EV) and “micromobility”, is emerging to save the day.

Micromobility, a term coined by Apple analyst Horace Dedi, refers to travel of less than eight kilometres. As Uber’s CEO said recently, “During rush hour, it is very inefficient for a one-ton hulk of metal to take one person 10 blocks”. We don’t need to be driving cars designed for high-speed road trips through the Alps every day, because usually we just need to travel short distances to and from work, school, or shopping malls.

According to research by CB Insights, 60 per cent of trips in the USA. are less than five miles in distance and can be replaced by micromobility solutions such as electric bikes and scooters. Within Southeast Asia’s dense megacities, we imagine that this percentage is much higher.

Also Read: Grab launches GrabTukTuk Electric in Chiang Mai for greener transportation

This is why, while electric cars and AI-powered self-driven vehicles make for sexy headlines, it’s actually the humble electric scooter that will create the most meaningful impact for Southeast Asia within the next few years.

Electric scooters are inexpensive and can be easily charged at any electrical socket, or with cheap removable batteries. Falling battery costs and improved charging efficiency means that soon there won’t be any excuse why we can’t replace most gasoline motorcycles with EV, and even replace many of our car trips with an EV 2-wheeler alternative.

Micromobility solutions are magnitudes more efficient than their larger or gas-powered counterparts. Analysis by Wired found that one-kilowatt hour of energy can only get a traditional gas automobile 1.3 kilometres while electric automobiles can achieve a better 6.6 kilometres. E-scooters, however, can travel 133 kilometres on the same amount of energy – approximately 20x more efficient than electric cars and 102x better than traditional gas-powered cars. They also reduce traffic congestion due to their smaller form factor.

According to a recent study by Mckinsey, an electric scooter can make its cost back in just four months and represents the most cost-effective form of transport for short distances.

Micromobility solutions are rapidly being adopted globally. According to Lime public data from the US, 30 per cent of their riders recently replaced an automobile trip with an e-scooter ride, while 27 per cent of their riders in urban cities used an e-scooter to connect to public transportation on their most recent trip.

Countries in Asia are experiencing similar adoption trends. Shared bikes are now the third most popular mode of public transportation in China, while other countries in Asia like Taiwan, Singapore, and South Korea have also seen strong traction, according to CB Insights.

Southeast Asia won’t be excluded from the global EV micromobility trend. We met with China’s Niu Technologies, a NASDAQ-listed producer of electric scooters, a couple of weeks ago to discuss their international ambitions and Southeast Asia in particular. According to data presented by Niu, Southeast Asia’s EV 2-wheeler market is indeed on the cusp of a massive expansion thanks to the factors outlined above. The company expects Southeast Asia’s EV 2-wheeler market size to expand by over 400% from 2017 to US$2.5 billion of annual revenue in 2022.

EV 2-wheelers thus represent a multi-billion dollar new market for Southeast Asian tech companies, and interestingly it’s a unicorn-sized near term revenue opportunity that does not yet have any established players.

Japanese incumbent motorcycle producers are way behind in EV and won’t be ready with anything significant in the next couple years, while Chinese producers have yet to establish a major foothold in the region and are yet to produce a 2-wheeler designed for Southeast Asia’s particular requirements (As compared to China, Southeast Asian consumers need higher speed and range, plus the ability for their vehicle to manage hot climates).

Hence EV micromobility not only represents a solution to Southeast Asia’s traffic congestion and air pollution but also represents a multi-billion dollar revenue opportunity for innovative new companies. In addition to Chinese companies, regional players such as Vinfast in Vietnam, Viar in Indonesia, and Scorpio Electric in Singapore (who we work closely with as an advisor) are all moving full speed to capture this massive revenue opportunity.

Also Read: Dyson confirms to develop electric vehicle in Singapore-based production facility

According to Joel Chang, COO of Scorpio Electric, “Electric two-wheelers in Southeast Asia represent a multi-billion dollar opportunity where EV companies such as ours can not only do good for society but also do well as a business. With our Singapore-made motorcycle designed specifically for Southeast Asia, we aim to be one of the early-movers converting the region towards mobility that’s not only cleaner and greener, but also tech-enabled, fun, and sexy like a Tesla.”

No matter which companies manage to win and capture Southeast Asia’s EV micromobility revolution, their success will not only create new tech unicorns for investors but also cleaner air and less traffic for us all. We see truly healthy profits ahead for the industry.

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Image Credit : Andrew Poplavsky

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