Southeast Asia's electrification is accelerating
Two-wheeled vehicles are the most common means of travel in Southeast Asia, with a market size of about $20 billion, but the electrification rate is low. Local governments hope to boost the local electric industry chain while boosting consumption through the electrification of two-wheelers. We have observed that Thailand and Indonesia have launched electric motorcycle subsidies, and the Philippines has granted tariff exemptions for electric bicycles. As the birthplace of e-bikes, Chinese e-bike manufacturers have a comprehensive product matrix, rich channel management experience and mature industry chain support. China's leading two-wheelers are seizing the opportunity, with the second growth curve leaping out of the paper.
Southeast Asia is the second largest motorcycle market in the world, and subsidy policies will catalyze the electrification of two-wheelers.
The rugged mountainous terrain and relatively low per capita income make motorcycles the most dominant mode of travel in Southeast Asia. Southeast Asia is the second largest motorcycle market in the world after China, with sales exceeding 12 million units in 2022. After the epidemic, residents' travel demand has recovered to drive demand repair; at the same time, based on the development of manufacturing and the need to ensure energy security, Indonesia and Thailand will start to give each electric motorcycle more than RMB 3,000 subsidies in 2023 to encourage two-wheeled vehicles "oil for electricity", and the policy catalyst is expected to become the accelerated development of electric bicycles in Southeast Asia in 2023. The policy is expected to be the starting point for accelerated development of electric bicycles in Southeast Asia in 2023. Compared to the tariff exemptions available for export, the subsidy policy encourages local production, and we expect more Chinese industry chains to deploy overseas production capacity in the future, and the explosion of electrification will have more supply-side certainty.
Lowering the threshold to increase the use of penetration + replacement of oil motorcycle, annual sales in Southeast Asia is expected to exceed 40 million units.
We expect that the annual demand space for motorcycles and electric bicycles in Southeast Asia market can exceed 40 million units. Based on the current motorcycle ownership of about 250 million units in Southeast Asia and the historical trend of two-wheeled vehicle electrification in China and Vietnam, we forecast that annual sales of electric bicycles in Southeast Asia are expected to exceed 4.5 million units in 2025, and the overall two-wheeled vehicle electrification penetration rate in Southeast Asia is expected to reach 25% in 2025. A preference analysis of consumers in Southeast Asian countries reveals that small displacement scooters and recumbents under 125cc are generally popular among consumers, with the Honda Vision, Wave, and Beat being the best-selling scooter models in Southeast Asia in 2022. Consumer preferences provide a reference for e-bike manufacturers to design and promote their products. Electric products need to catch up or even surpass oil motorcycles in terms of performance and appearance design in order to gain consumer recognition.
Product cost performance continues to improve, and domestic players have a first-mover advantage in the big wave.
With the continuous technological breakthroughs, Yadi, VinFast and other new electric bikes launched in the range, maximum speed, power output and other performance parameters have basically reached the standard of replacing the 110cc mainstream oil motorcycle. At the same time, benefiting from lower energy costs and maintenance costs, the full life-cycle costs of e-bikes are basically on par with those of curved beam vehicles. The subsidies help narrow the gap between e-bikes and oil motorcycles in terms of upfront acquisition costs, further enhancing the certainty of electrification in Southeast Asia. Yadi has launched products designed specifically for the Southeast Asian market, accelerated the construction of production capacity and sales channels, and initially covered all major markets in Southeast Asia with Vietnam as its base. We expect that as the layout deepens, domestic players are expected to gain greater market share and dominate the process of electrification of two-wheeled vehicles in Southeast Asia.
Risk factors:
The risk of weaker than expected recovery of consumption in Southeast Asia, the risk of overseas demand for two-wheelers not as expected, the risk of increased market competition, the risk of a major safety accident outbreak of two-wheelers making consumers less enthusiastic about buying.
Investment Strategy.
Electric bicycle use threshold is lower, can further enhance the use of two-wheeled vehicle products penetration rate, coupled with Southeast Asian countries continue to launch policies to encourage "oil for electricity", we believe that the import of electric bicycles in Southeast Asia will accelerate, become China's electric bicycle OEMs to the first station. Chinese two-wheeled bicycle OEMs, with their global leading R&D technology and production capacity, are expected to dominate the electrification process in Southeast Asia, cultivating a second growth curve and ushering in a rise in volume and profit.
We hope that Gravity will play an important role in the electrification of Southeast Asia, so please keep an eye on Gravity to help you better understand the content of e-bikes.
-Gravity Ebikes info@gravitysz.com 1th/07/23