SINGAPORE (ICIS)--Asia's electric vehicle (EV) market will continue to grow at a fast pace, supported by strong sales growth in China, as more countries in the region look to support EV uptake to reduce emissions.
EV sales in Asia are projected to jump by 78.1% year on year in 2021, up from the estimated growth of just 4.8% last year, Fitch Solutions Risk & Industry Research said in a note on Tuesday.
The automotive industry relies on chemical firms to produce key applications such as tyre rubbers, coatings, interior and form plastics, lubricants as well as adhesives and sealants.
Total EV sales in the region will reach a high of just under 10.9m units by the end of 2030, up from an estimated sales volume of just over 1.4m units last year.
China, with 4.5m electric cars last year, has the largest fleet, according to the International Energy Agency's (IEA) Global EV Outlook 2021 report published in April this year.
The majority of EV demand will stream from the three most advanced economies in the region, namely China, Japan and South Korea.
This year, China is expected to account for close to 91% of the region's EV sales, while South Korea will account for 4.2% and Japan will account for 2.8%.
China's EV sales will accelerate this year with a year-on-year expansion of 83%, following estimated growth of 3.6% in 2020.
"China's EV market will continue to grow as the price differential between internal combustion engine vehicles and EVs shrink," Fitch Solutions said.
The country was the first major economic power to drive the adoption of EVs and is projected to remain the largest EV market globally through to 2030.
"Also, many first-time vehicle buyers, who enter the market largely due to the fear of being exposed to COVID-19 when using public transportation, are opting to buy small EVs because of government subsidies and the fewer regulatory hurdles involved with buying and owning EVs," it said.
China's 14th Five-Year Plan (14FYP), announced on March 11 this year, will have several major implications for China's automotive industry, specifically for new energy vehicles (NEVs) and autos within the internet of things (IoT).
EV sales in China will average annual growth of 14.9% over 2021-2025 to reach a sales volume of just over 2.25m units.
"EVs remained a structurally growing segment within the [China] auto market with increasing penetration," Nomura Global Markets Research said in a note.
China's passenger EV wholesale volumes more than doubled in May to 204,000 units, despite the overall slowdown in the country's auto market in large part due to a chip shortage, it said.
However, chip supplies are expected to gradually improve from the third quarter of 2021. The impact on passenger vehicle sales volumes would be greatest in the second quarter followed by a milder impact in Q3 2021, Nomura added.
In South Korea, EV sales will increase by 48.6% year on year to reach an annual sales volume of just under 75,000 units in 2021, as government incentives support consumers to buy EVs.
South Korean EV sales will average annual growth of 26.3% over 2021-2030, to reach an annual sales volume high of around 500,000 units by the end of 2030.
"We believe that South Korean EV sales will continue to grow as the government further incentivises sales by offering scrappage incentives, extending EV subsidies, implementing a carbon tax and potentially limiting the use of internal combustion-engined vehicles," Fitch Solutions said.
In Japan, EV sales are projected to increase by 11.2% year on year in 2021 to reach an annual sales volume of around 46,000 units.
"We expect EV sales in Japan to pick up from 2022 onwards as the local automakers such as Toyota, Suzuki and Honda all expand their EV offerings," Fitch Solutions said.
Photo: Workers work on the production line of a new energy port container truck and a new energy driverless container truck in Yancheng in east China's Jiangsu Province (Source: Shutterstock)
Focus article by Nurluqman Suratman