The Future of Electric Vehicles in Asia

HKUST IEMS Thought Leadership Brief No. 64


Alicia Garcia Herrero

Much attention is being paid to electric vehicles (EVs) in the green transition because the technology already exists to help governments reduce emissions at reasonable costs. By pushing the shift towards EVs, governments can buy time to develop the technology to reduce emissions in other sectors at a reasonable cost. A second reason is that the EV sector offers a great industrial opportunity, not only for those who have traditionally produced cars but also for newcomers. The EU and China are so far leading but in different ways. The EU was the first to encourage the demand for sustainable cars, and to a lesser extent to produce them. China encourages production with subsidies and is expected to benefit from the huge potential demands. China also leads in battery components and controls the supply of related raw materials. 

Components for EV batteries could easily become another geopolitical standoff and, possibly, a new bottleneck in the global supply chain. Countries that have benefited from Europe's leadership position in the automotive sector need to get their act together by starting production and ensuring the supply of their components. As for Asia ex-China, it is time to think of stepping up the production of EVs and batteries to avoid excessive reliance on Chinese exports.


About the author

Alicia García-Herrero is the Chief Economist for Asia Pacific at Natixis. She also serves as a Senior Fellow at European thinktank BRUEGEL and a non-resident Research Fellow at Real Instituto Elcano think tank. She is currently an Adjunct Professor at the Hong Kong University of Science and Technology. She is also a Faculty Associate of HKUST IEMS. More >>

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