If the transition from internal combustion to electrical and electrified combustion is very visible in Europe and the UK, and it will be slightly delayed in the US, this has not been a hot topic in most of the Asian countries. Global and regional fleet managers responsible for Asian fleets will have noticed that OEMs don’t even publish the CO2 emissions of locally produced vehicles. Fleet electrification is just one of the topics covered at the online APAC Global Fleet Summit on January 20-21, 2021.
The status quo
So far, only a few Asian countries have formalized some kind of emissions regulation. Thailand, for example, reviewed its excise tax in 2016 based on emissions, engine size and vehicle load. Large luxury cars with 3 liter engines and + 200 g / km emissions are taxed at 50%, while clean cars are only taxed at 10%. The (popular) small vans such as the locally produced Toyota Hilux are not subject to emissions-related regulations and drive away with a tax of only 3% (for individual cabins under 3,250 cc and under 200 g / km).
China has invested massive amounts of money in electrification, which is reflected in subsidies for both manufacturers and end customers. These subsidies have existed since the “Made in China 2025” business plan and are part of a broader strategy to convert Chinese industry from low-tech to high-tech. In addition, China wants to become less dependent on imports of energy (oil). The plan is working and the acceptance of electric vehicles is visible on the streets of Chinese cities: almost all two-wheelers and three-wheelers are purely electric, and in recent surveys, 50% of Chinese consumers confirm that their next car will be electric or electrified.
However, other key countries in the region did not specifically comment on their decarbonization intentions. Australia is perhaps the most striking example: despite the fact that it has been the subject of much political debate, the country appears reluctant to enact regulations that incentivize low-emission vehicles. In addition, local climate activists are frustrated with the lack of alternatives such as public transport that could reduce vehicle emissions.
So what about Asia’s second largest economy with around 80 million vehicles out of a population of 126 million? It would be most wrong to say that Japan has done nothing to reduce its vehicle-related emissions. The fact is that Japan has an extremely efficient public transport network, new taxis are hybrid Toyotas, small (“kei-”) cars have had a cheap tax system, and hybrid vehicles have become the standard for consumers. What was missing, however, was a strong mission statement from the Japanese government that put sustainability high on the agenda. And that could have happened now.
Near zero by 2050
Japan, cautious and conservative by nature, prefers nondisruptive development over policy and immediate change, as is the case in China. Nonetheless – and surprisingly – the Japanese government, led by the new Prime Minister Suga, has made a number of statements that will have a significant impact on both the automotive industry and public perception.
As part of a post-corona strategy, the Japanese government has presented a 34 trillion yen strategy (326 billion US dollars), the decarbonization of which is an important pillar. This leads to various initiatives, e.g. E.g. an incentive of JPY 400,000 ($ 3,845) for electric vehicles. The next step is to increase these incentives to JPY 800,000 (USD 7,690).
The most aggressive statement, however, is Japan’s intention to reduce emissions to “near zero” industry and nationwide by 2050. Internal combustion engine vehicles will most likely be banned by the mid-2030s (not yet officially confirmed); By then, Japanese statistics predict that 50% to 70% of all vehicles will be “new energy” vehicles.
What does this mean for the APAC Fleet Manager?
The moral implications of the “big economies” in APAC should not be underestimated. China’s electrification has had a direct and immediate impact on awareness of emissions standards in many Asian countries. Let’s not forget that these economies are highly dependent on China. However, when Japan chooses sustainability, it confirms the correctness of such strategies. China sets a good example when it comes to innovations, Japan when it comes to implementation.
We can expect a trickle effect for other countries, especially the fast growing South Asian nations. These countries are well positioned to accelerate electrification for different regions: they have the funding, they are looking for new opportunities for industry and they have the (natural) resources. At the same time, these nations are striving to reduce the negative effects of urbanization, of which pollution and congestion are most visible.
Hence, global and regional fleet managers can anticipate tax / regulatory changes by adapting policies in favor of electrification and introducing new energy vehicles early on. 2021 will be the first year of the decarbonization of the Asian company car fleet.
Understanding is the first step to success: unlocking the efficiency of fleets and mobility in APAC at the Online Global Summit APAC Summit on January 20 and 21, 2021.