As the world grapples with climate change, corporations are increasingly focusing on ESG. One significant area where companies can make a positive impact is by adopting electric vehicles (EVs) in their corporate relocation strategies. With China leading the way in global EV adoption, this shift aligns with global sustainability goals. However, this presents opportunities and challenges for Human Resources (HR) departments, Destination Service Providers (DSPs), household goods companies and Relocation Management Companies (RMCs).

The Potential of EV Growth in Southeast Asia

The adoption of EVs in Southeast Asia is gaining momentum, with the market showing significant growth potential. According to EY-Parthenon analysis, the ASEAN-6 EV market (Indonesia, Malaysia, Thailand, Vietnam, Philippines, and Singapore) is expected to record a compound annual growth rate of 16%–39% between 2021 and 2035. Potential annual sales opportunities are estimated to reach US$80b–US$100b by 2035, a substantial increase from about US$2b in 2021. According to a McKinsey report, Singapore, Thailand and Indonesia are the countries most poised for growth in this sector.

EY analysis forecasts total EV sales volume in Southeast Asia to reach about 8.5 million units by 2035. Indonesia is expected to be the region's largest market by volume, with estimated sales of 4.5 million units across all EV segments. Thailand is predicted to come in second with an estimated sales volume of 2.5 million units.

The global mobility industry's challenge is how its supply chain adapts to using EVs today. Transport providers interviewed by Relo Network Asia in Cambodia, Malaysia, and Singapore highlight 2 main issues: EVs are 20-30% more expensive than petrol vehicles, depending on the market, and there is a lack of EV chargers across each country. For example, Penang, a booming hub for the semiconductor industry, has only one EV charger in some locations outside George Town, according to Plugshare.

Benefits of EVs in Corporate Relocation

Integrating EVs into corporate relocation strategies offers multiple advantages:

1.Environmental impact: EVs significantly reduce carbon emissions compared to traditional internal combustion engine (ICE) vehicles.

2.Cost savings: EVs often have higher upfront costs but offer long-term savings on fuel and maintenance. This can be particularly beneficial for companies managing large fleets or offering car allowances to relocating employees.

3.Enhanced corporate responsibility: Adopting EVs demonstrates a company's commitment to sustainability, improving its reputation among industry peers and clients.

Mobility Case Study: Beijing

In a recent discussion with Sean Collins from ATMA’s ESG Committee, who managed a program in Beijing from 2006-2010, he highlighted the early challenges and efforts towards more sustainable vehicle policies. Sean recounted his experience, "Back then, the electric vehicle revolution hadn't really started yet, so it was pretty much all petrol-driven cars, and the pollution in Beijing was horrific."

Managing a large expat population with car leases, Sean noticed the preference for large fuel-inefficient cars and the severe impact of car pollution on both the environment and public health. To improve the situation, Sean collaborated with his company's environmental officer to introduce restrictions on car leases, favouring more fuel-efficient models.

This policy change both reduced pollution and sparked awareness among assignees about the importance of vehicle efficiency. This early initiative highlights the gradual, yet impactful steps corporations can take to embrace sustainability and reduce their carbon footprint, paving the way for more sustainable mobility solutions in the future.

The Important Role of HR, DSPs and RMCs

HR departments, DSPs, and RMCs play vital roles in promoting EV use during relocations:

1.HR initiatives:

• Educate employees on the benefits of EVs
•  Integrate EV options into mobility policies and compensation packages
• Consider offering incentives for employees choosing EVs

2.  DSP contributions:

•  Assist expats in accessing EV resources and infrastructure
• Provide orientation and training on local EV regulations and charging options
•  Partnering with providers who have EVs in their fleet for their area orientations and home search programs

3. RMC strategies:

• Partner with EV-friendly vendors and service providers where available
• Develop policies that prioritize EV use in relocation packages

4. Household goods:

• Pioneering household goods companies are now integrating electric vehicles and trucks into their fleet. Crown Relocations, for example, has recently introduced electric trucks in both Hong Kong and Singapore.

Overcoming Challenges

Despite the benefits, several challenges need addressing:

• Charging infrastructure: Many Southeast Asian cities lack extensive charging networks. The EY-Parthenon analysis highlights that charging stations' availability and ease of use are vital for driving EV demand. Companies can collaborate with local authorities and property managers to install charging stations at offices and residential areas.
• Cost: While EVs offer long-term savings, their initial cost can be higher. The EY-Parthenon analysis emphasizes that EV affordability is a significant challenge to adoption in Southeast Asia. Companies might consider leasing options or providing financial incentives to offset this difference.
• Market readiness: EV readiness varies across the ASEAN-6 countries. Businesses should consider demand, supply and infrastructure factors that impact EV readiness in each market.
• Ethical sourcing and supply chain: Access to raw materials is critical for battery production. Several Southeast Asian countries have substantial reserves of key materials like nickel and copper, which could influence the regional EV ecosystem. However, this often comes at a significant cost to the environment, workers and indigenous communities. “Battery passports” could be one way to help overcome these serious issues.

The Role of Hybrids

EV sales accounted for just 2.1% of total vehicle sales in Southeast Asia in 2022, compared to 2.3% in India and 29% in China. While full EVs are the ultimate goal, hybrid vehicles, offering improved fuel efficiency and reduced emissions compared to traditional ICE vehicles, can be an excellent transitional option in areas with limited charging infrastructure.

Mobility Case Study: Integrating EVs into Crown Worldwide Group’s Household Goods Business

Crown Singapore has long been committed to integrating sustainability into its global mobility operations. As Luis Contreras, Regional Director of Crown in Singapore highlighted, “One milestone in this journey was the shift to electric trucks, motivated by the company’s goal to reduce its carbon footprint and align with Singapore’s national sustainability goals.” Crown Singapore recognised the increasing availability of EVs and government incentives as fundamental to this transition. Integrating electric trucks into their fleet is central to their broader sustainability strategy, aimed at decarbonising operations and enhancing energy efficiency.

Adopting electric trucks came with challenges like adequate charging infrastructure and managing vehicle range limitations. Crown Singapore tackled these issues by investing in new infrastructure and optimising fleet management. Comprehensive driver training ensured a smooth transition to the new technology, significantly reducing greenhouse gas emissions.

Building on its success in Singapore, Crown Worldwide Group has expanded the use of electric trucks to other markets, including the UK, UAE, Malaysia, and Hong Kong. This expansion aligns with Crown’s broader ESG strategy to support the global shift towards a low-carbon economy. Electric trucks help Crown achieve its targets for reducing its environmental footprint and enhancing the sustainability of its transportation services.

Looking Ahead

The future of corporate mobility in Southeast Asia is increasingly electric. The EY-Parthenon analysis estimates the region's EV ecosystem to be worth about US$100b–US$120b by 2035. Companies that proactively integrate EVs into their relocation strategies will be well-positioned to meet future regulatory requirements and attract environmentally conscious talent.

However, the success of EV adoption across mobility programs in the region will require a deep understanding of local markets, available vehicles and synergies within the value chain. Amidst fast-paced technological improvements and EV battery charging efficiencies, recent battery safety concerns also point towards potential broader regulatory changes.

Conclusion

Integrating EVs into corporate relocation strategies in Southeast Asia is a forward-thinking business decision. For HR departments, DSPs, and RMCs, the transition to EVs presents an opportunity to innovate and add value to their services. Mobility professionals can play a pivotal role by staying informed about EV developments, collaborating with local partners, and continuously educating both their staff and clients. The road to full EV adoption may be long, but every step taken today will have positive future impacts.