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Articles, Commentaries, Economics, The Edge

Should Malaysia ride the coming EV disruption or stay with the norm?

To go with AFP story China-auto-show-environment-Tesla,FOCUS by Bill Savadove
This picture taken on March 17, 2015 shows Tesla Model S vehicles parked outside a car dealership in Shanghai. Serial entrepreneur Elon Musk has launched spacecraft into orbit, but popularising his Tesla electric cars in China is proving to be tougher than rocket science. AFP PHOTO / JOHANNES EISELE / AFP / JOHANNES EISELE

By OOI KEE BENG. For The Edge Malaysia Weekly, April 29, 2019 – May 05, 2019.

The advent of electric vehicles (EV) offers opportunities for cities and countries to limit and reverse the use of unclean and non-renewable energy sources. But for that to happen, quite a bit of imagination in policymaking and public behaviour steering is required. Beyond that, you also need a concerned population who can envision that what has been considered the norm thus far does not need to remain the norm.

But how do we raise awareness and a sense of urgency among the people and their representatives? One perspective I would suggest is for us to start thinking of modern times as a series of disruptions. As we know, technological innovations and marketing approaches tend to bring about paradigmatic and behavioural changes in profound ways.

Since these changes are now speeded up more than ever, we have felt the need to use the dramatic term “disruptions” instead to describe them, not so much to signify technological advancements as to highlight the deep cultural changes these advancements bring.

As a disruption takes root, what it displaces appears old-fashioned and unimaginative. We have seen that happen with ride sharing, which makes the taxi business look pathetic and irrational, with the hotel business with the coming of Airbnb, in the tourism industry where middleman agencies are having to reinvent themselves or perish, and in the retail business in general. The music business, book business, food business, travel business, movie business, and even the education industry are all facing huge challenges. We live in exciting times, and rather vicious times as well.

What is interesting about disruptions is that they make what was recently the norm look ancient, and they do that so very quickly. The smartphone is only about a decade old, for example. Indeed, the communication industry has been one of those most disrupted in recent times.

One could say the same thing about Malaysian politics. The advent of news websites, blogs and social media in general at the turn of the century has, over the last two decades, undermined Malaysians’ trust in the old regime, which had been in power for six decades, and we could actually see how the disruption of the establishment’s paradigms over the last few elections finally led to the political disruption last year.

So many disruptions are taking place that we can hardly keep up in describing them.

One of the central characteristics of 20th century life — a norm of the last 100 years — has been the internal combustion engine. However, the internal combustion engine has been around for a long time, and it has come to define modernity in many ways. It is also deeply embedded in our material culture and in our production methods. Moving beyond it will therefore not be easy.
To keep the discussion grounded, we should first consider the present socioeconomic situation of the people of Malaysia.

The income level of most Malaysians is quite low, and one cannot expect most of them to give up old habits and old vehicles in order to purchase expensive electric vehicles for which the supporting infrastructure is still weak. They will prefer to make do for as long as possible unless concerted efforts are made by the government and by the private sector to change the transport ecosystem.

So, how can things be made to move?

1. Investments by public-private partnerships in small EVs appear to me to be the way to go. Popularising electric motorcycles of various sizes, powered by home-charged batteries, holds great promise in the Malaysian context.

2. Electric buses are another good option, but this may require a huge investment because of maintenance costs in material and personnel.
3. Raising public awareness about the pros and cons of EVs.

4. Moral or “green” marketing alongside economic incentives such as tax and fee rebates, privilege parking, toll rebates and so on can whip up public interest to invest in clean energy.
5. Ride-sharing companies using EVs as a special option can have its appeal for certain segments of society.

6. Investments in R&D in Malaysia for battery development and EV-related technology and infrastructure.

7. Getting rid of hidden and overt subsidies for fossil fuel will make petrol much less attractive in the calculation of people choosing between new and old options.

Let me end by looking at and comparing the situation for EVs in a few countries.

Norway, one of the smallest countries in the world in terms of population — with an effective population similar to Singapore’s — has been hugely successful in getting its people to adopt EVs. As many as 57% of all new cars in the country are either fully electric or hybrids. This has made Oslo one of the cleanest and quietest cities in the world. The Norwegians’ greater agenda, however, is to make Oslo a car-free city, which is only possible if new means of public transport are developed, such as electric vans, light trucks and ride-share vehicles.

In China, the world’s most populated country, we have also seen an impressive rise in EV sales. Nearly 1.3 million electric vehicles were sold in the country last year — a 62% increase over 2017. The Chinese market for EVs had already overtaken the US by leaps and bounds in 2015 and is now where the most EV sales take place. American sales of EVs last year only reached 30% of that in China. In the city of Shenzhen, 100% of the buses are electric, and soon, all taxi-cars will be replaced by EVs as well.

The latecomer advantages in automobiles, which China seem to be taking advantage of, become even more obvious if we compare it to the difficulties faced by high-tech Germany, where the automobile industry has been traditionally strong and influential. Fear that the disruption EVs can bring will cut deep and affect communities, workers and related industries tremendously is strong. Accepting disruption is naturally the hardest for those who have been the leaders in whatever industry it is that is being disrupted.

For Malaysia, things should be easier, but what limits us may be political will, vision and daring, a passive private sector, and a weak R&D tradition.

About Ooi Kee Beng

Dr OOI KEE BENG is the Executive Director of Penang Institute (George Town, Penang, Malaysia). He was born and raised in Penang, and was the Deputy Director of ISEAS - Yusof Ishak Institute (formerly the Institute of Southeast Asian Studies, ISEAS). He is the founder-editor of the Penang Monthly (published by Penang Institute), ISEAS Perspective (published by ISEAS) and ISSUES (published by Penang Institute). He is also editor of Trends in Southeast Asia, and a columnist for The Edge, Malaysia.

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