Global EV leader Tesla is seeing a slowdown. Nonetheless, the transition to electric mobility is picking up speed here, thanks to new players and funding. Besides owning an EV, how can investors position for a piece of this growing ecosystem?
Singapore’s “EV vision” sees an end to all vehicles with internal combustion engines (ICE) here by 2040. According to the Land Transport Authority (LTA), an electric vehicle (EV) emits half the amount of carbon dioxide compared to an ICE vehicle.
If all of Singapore’s light vehicles run on electricity, carbon emissions would fall by around 1.5 to 2 million tonnes, or some 4% of total national emissions.
That said, LTA reported in July 2023 that EVs accounted for only 20.4% of total passenger cars on Singapore’s roads. This will increase as the transition is rolled out in phases.
From 2025, Singapore will no longer allow new diesel car and taxi registrations. From 2030, all new car registrations will have to be of cleaner-energy models. These include electric, hybrid or hydrogen fuel cell cars.
One concern among car owners is the cost of switching to an EV. As EV technology matures, LTA expects the upfront cost of buying an EV and ICE vehicle to be “similar” by the mid-2020s.
See also: ComfortDelGro ENGIE opens 1,000th charge point in Singapore, launches new app
“We aim to make it more attractive to own and use electric cars through incentives and rebates such as the EV Early Adoption Incentive (EEAI) and Vehicular Emissions Scheme (VES) to narrow the upfront cost gap with ICE cars,” says LTA.
Under the EEAI, fully electric cars and taxis that are newly registered between Jan 1 this year and Dec 31, 2025, will receive a 45% rebate off the Additional Registration Fee (ARF), capped at $15,000.
Under the VES, electric cars in Band A1 — the “cleanest” tier with less than 90g of carbon dioxide per km driven — can receive a $25,000 rebate. Together with lower road tax for electric cars, the schemes lower the upfront costs of owning an electric car by up to $45,000.
See also: BYD revenue eclipses Tesla for first time as EV giants go head to head
Another concern is the availability of charging stations. LTA has set a target of 60,000 EV charging points by 2030. This includes working with the private sector to achieve 40,000 charging points in public car parks and 20,000 charging points in private premises. LTA says it is prioritising HDB estates, with approximately 2,000 car parks to be equipped with charging points by 2025.
According to LTA, overnight slow charging will continue to be the predominant charging strategy for most vehicles, but “high-powered fast chargers” will be needed to meet the needs of certain segments of high-mileage EVs, such as taxis or commercial vehicle fleets.
These will be deployed at HDB car parks in commercial complexes, town centres, neighbourhood centres and JTC’s premises, which are frequented by fleet drivers during their breaks and are close to hawker centres and coffee shops.
EV-Electric Charging (EVe) — a wholly owned subsidiary of LTA — is working with Huawei to explore the use of ultra-fast chargers here, to bring charging down to mere minutes.
From land to sea
Increasingly, all forms of transport in Singapore are becoming electrified. ComfortDelGro C52 — Singapore’s largest taxi operator — aims to convert its entire fleet to fully electric and hybrid models by 2040.
“If you look at all the new cars given out last year, they are all either electric or minimally hybrid. The [Toyota] Prius and [Hyundai] Kona are all electric. Even the Lexus cars are all hybrid … All taxis are being replaced with at least hybrid models,” says group CEO Cheng Siak Kian to The Edge Singapore.
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As of February, ComfortDelGro operates some 6,501 Comfort and 2,223 CityCab taxis. Together, they represent nearly 65% of Singapore’s 13,436-strong taxi fleet.
Via its separately listed subsidiary SBS Transit, ComfortDelGro operates one of the largest fleets of buses in Singapore as well.
The Mainboard-listed company, which dropped out of the Straits Times Index in September 2022, expects to spend $6 billion to replace the fleet of its ICE taxis and buses with EVs.
Cheng says the figure includes general capex replacements, “but that is a long-term number spread over 10 to 15 years”.
Pre-pandemic, annual capex neared $400 million, and this will go up with electrification, says Cheng. “You add a little bit more because you need to build the infrastructure to support [it].” The same is happening with Singapore’s buses. LTA has committed to achieving a “100% cleaner-energy bus fleet” by 2040.
Since March 2020, all new public bus purchases have been electric models, and by 2030, electric buses are expected to make up half of Singapore’s public bus fleet.
Even those heading out to sea may turn to electric charging. From 2030, all new harbour craft operating in the Port of Singapore will have to be fully electric, be capable of using B100 biofuel or be compatible with net-zero fuels such as hydrogen.
To this end, the Maritime and Port Authority of Singapore (MPA) launched on April 8 the first pilot trial for an electric harbour craft (e-HC) charging point.
Located at the Marina South Pier, the charging point was awarded to a partnership between Singapore-based electric vessel start-up Pyxis Energy, Pyxis Maritime and SP Mobility.
Under this pilot, Pyxis and SP Mobility have deployed a 150-kilowatt (kW) land-based direct current fast charger. It can charge an e-HC with an approximate battery capacity of 500 kilowatt-hour (kWh) in around three hours, allowing the e-HC to travel about 50 nautical miles, or about 90km.
Users of the e-HC charger will need to scan a QR code using the SP app and make payment via the app, similar to EV users.
MPA says the data from this two-year pilot will be used to develop a national e-HC charging infrastructure master plan, including national standards for e-HC charging infrastructure.
MPA had issued a call for proposal in August 2023 to develop, operate and maintain electric harbour craft points at selected locations in Singapore. At the close of the call in October 2023, MPA had received a total of 12 proposals from four consortia.
Tommy Phun, founder of Pyxis, says: “We are delighted to announce the commencement of charging operations at Marina South Pier for the X Tron, the inaugural vessel from Pyxis’ flagship product line, the Pyxis One series of electric vessels. Tailored specifically for the dynamic Singapore port market, the Pyxis One seamlessly shuttles passengers between mainland Singapore and ships stationed at the anchorage.”
MPA also awarded a mobile charging concept proposed by Seatrium O&G (International), and a high-power (350–450kW) DC Charger proposed by Yinson Electric. MPA says it will continue to work with the two companies to further develop their proposals for applications in Singapore.
SE Asia’s ‘EV charging backbone’
Singapore’s efforts to electrify its roads could even extend beyond its borders. The largest EV charging operators on either side of the Causeway are joining forces, boasting a combined network of 4,000 charging points by the end of this year.
On April 5, Singapore’s Charge+ and Malaysia’s ChargeSini signed a “roaming collaboration agreement”, which grants EV drivers from both parties access to each other’s charging networks across the region.
Charge+ currently boasts about 2,000 EV charging points in Singapore and the region. Founded in 2018, Charge+ aims to install 30,000 EV charging points in Southeast Asia by 2030.
Charge+ has started work on a 5,000km “EV charging highway” that stretches across five Southeast Asia countries: Singapore, Malaysia, Thailand, Cambodia and Vietnam. Once complete, it will be the “longest EV charging backbone in the region”, according to Charge+.
Meanwhile, ChargeSini’s network comprises 701 operational EV charging bays across Peninsular and East Malaysia. This network includes 122 DC charging points and 579 AC charging points. The partnership builds on existing roaming partnerships between Charge+ and several key EV charging players in the region, namely Thailand’s Electricity Generating Authority of Thailand, Malaysia’s Tenaga Nasional and Indonesia’s Perusahaan Listrik Negara.
The announcement with ChargeSini represents a “major milestone” in enhancing the cross-border charging experience in Southeast Asia, says Charge+. “[This] will help address the longstanding concern of prospective EV buyers about the inconvenient signing-up process with multiple mobile apps.”
Charge+ CEO Goh Chee Kiong says the partnership will “dispel the misperception” that EVs are not suitable for long-distance, cross-border travel. “We believe in creating seamless access to more charging points, thereby contributing to the growth in the adoption of electric vehicles in the region.”
Charge+ announced the close of its Series A funding round in October 2023, led by Singaporean venture capital firm Trive Venture Capital. The sum was not disclosed.
Meanwhile, ChargeSini last raised RM5.58 million ($1.6 million) from 74 investors in an equity crowdfunding round on Malaysian platform pitchIN. The May 2023 round valued ChargeSini at around RM50 million.
ChargeSini is now working on its Series A round, and targets to raise US$6 million ($8.12 million) this year. This would value the two-year-old company at around US$120 million.
While this is the first time the two largest players have joined hands, the ComfortDelgro-owned CDG Engie and Malaysia’s Yinson GreenTech signed a similar agreement in October 2023 to create a combined network of around 1,000 charging points. That was then the largest charging network between Singapore and Malaysia.
Investing in global players
The conversation around EVs tends to revolve around the Nasdaq-listed Tesla and China’s BYD Auto. The former makes headlines in part due to the hijinks of its tempestuous CEO and largest shareholder Elon Musk, while the latter is known for edging out Tesla as the world’s largest electric carmaker.
BYD delivered some 41,000 more EVs than Tesla in 4Q2023, handing a record 526,409 all-electric cars to buyers that quarter, up 22% q-o-q. BYD had dethroned Tesla by volume in 2022, delivering 1.86 million EVs that year and beating Tesla’s 1.31 million units, though this figure included all-electric and other vehicle types. Drivers are not the only ones keeping a close eye on these names.
Investors, too, may be drawn to the promise of a global EV transition. Tesla’s stock may be down some 16% over the year to US$157.11 on April 17, but it had reached a 52-week high of US$299.29 in July 2023.
Tesla’s shares slipped after Musk announced on April 15 a round of job cuts for more than 10% of its staff, possibly impacting more than 14,000 employees. Its market valuation fell below US$500 billion on April 16, a level not seen since April 2023.
BYD Auto is the largest subsidiary of BYD Company, which is dual-listed in Hong Kong and Shenzhen. Its stock in Hong Kong is down 12.42% over the year to HK$203 ($35.34) on April 17, but like Tesla, its shares had reached a 52-week high of HK$280.60 in July 2023.
Amid share price declines in the two giants, China’s Li Auto is a name to watch. The EV manufacturer went public on Nasdaq in 2020 and in Hong Kong in 2021. As at April 17, shares in Li Auto are up more than 8% over the year to US$28.41, far outperforming the shares of its larger rivals.
In 4Q2023, Li Auto delivered 131,805 vehicles, a 184.6% y-o-y surge. In fact, deliveries have increased every quarter since 2Q2021. Then, the company had delivered just 17,575 vehicles.
Net income for FY2023 ended Dec 31, 2023, came in at RMB11.81 billion ($2.25 billion), reversing from a RMB2.03 billion net loss in FY2022. Net cash provided by operating activities was RMB50.69 billion in FY2023, up 586.9% from RMB7.38 billion in FY2022.
Free cash flow, meanwhile, was RMB44.19 billion in FY2023, up 1,861.8% from RMB2.25 billion in FY2022.
Singapore investors can easily invest in another Chinese EV — Nio, triple-listed in the US, Hong Kong and Singapore.
For the full year ended Dec 31, 2023, a record number of deliveries helped drive revenue up 6.5% y-o-y to RMB17.1 billion. With improving margins, net loss fell by 7.2% y-o-y to RMB5.4 billion. Shares in Nio have fallen some 60% to US$3.82 as at April 17.
Nio attracted additional investment from an existing shareholder — CYVN Investments of Abu Dhabi — in December 2023.
With an additional investment of US$2.2 billion, CYVN now owns 20.1% of Nio, to support Nio’s bid to garner a bigger share of the so-called premium end of EVs in its home market and more.
China is making inroads not just in EVs, but conventional cars as well. The export of cars from China increased from around one million to two million between 2020 and 2021.
In 2023, it reached almost five million, according to data from the China Association of Automobile Manufacturers.
According to official numbers, China shipped more cars abroad than Germany in 2022, becoming the second-biggest exporter, and more than Japan in 2023.
While China continues to ship a large number of conventional cars to Asia, the Middle East and Africa, its EV sales to Europe have been surging the most, says Statista data journalist Katharina Buchholz in an April 3 note.
The share of EVs in China’s car exports has grown to 25% from 15% two years ago. As EV sales slow in China, carmakers are making bigger pushes to export overseas, she adds.
The slower-than-expected sales growth is likely just a bump in the road, says Richard Siaw, director of Southeast Asia, Global X ETFs. “China’s domestic and export EV sales reached record levels of 30 million vehicles last year as vehicle prices fell. With marginally improving consumer confidence, price competition is likely to continue in 2024.”
Siaw forecasts a lower 22% growth this year to 11.5 million domestic EV deliveries. “To encourage EV adoption, purchases of EVs are exempt from purchase tax in 2024–2025. Overall, domestic demand for battery EVs and plug-in hybrid EVs rose 25% and 85% in 2023 respectively, suggesting evolving consumer preference towards hybrid options.”
Given the capital-intensive nature of the sector, manufacturers would need to rely on scale to turn a profit, says Siaw.
“According to an industry estimate, a production of 500,000 vehicles could be a potential break-even requirement. Thus far, only big players could achieve this level of production. Foreign players have acquired stakes in smaller [Chinese] makers as a way of overcoming the competition and further M&A activities could emerge in the coming years.”
EV ETFs
Between 2022 and 2035, global EV sales are forecast to grow at a compound annual growth rate (CAGR) of 15.5% and account for more than 60% of annualised overall vehicle sales by the end of that period.
China is well-positioned to capitalise on this opportunity, says Siaw. Investors who want to hitch a ride to the top with Chinese EV names have a few ETFs to consider.
The NikkoAM-StraitsTrading MSCI China Electric Vehicles and Future Mobility ETF, which was listed on the Singapore Exchange S68 in January 2022, seeks to replicate the returns of the MSCI China All Shares IMI Future Mobility Top 50 Index.
Since its inception, however, the ETF has returned –32.26%, tracking the benchmark’s –31.49% return.
As at April 9, the ETF has a fund size of $25.46 million. Its top 10 holdings, as at Feb 29, are Li Auto (12.9%), Contemporary Amperex Technology, or CATL (9.4%), Nio (7.1%), BYD Company Class H (6.1%), Geely Automobile Holdings (5.9%), Sungrow Power Supply (3.6%), BYD Company Class A (3.3%), Tianqi Lithium Corp (2.9%). EVE Energy (2.9%) and Xpeng (2.4%).
There is also the Hong Kong-listed Global X China Electric Vehicle and Battery ETF, a passive fund that tracks the Solactive China Electric Vehicle and Battery Index NTR. S
ince inception in January 2020, the ETF has returned 28.02% compared to the underlying index’s 32.76% return. That said, the fund returned losses of –31.03% in 2023, tracking the index’s –30.02% decline last year.
As at Feb 29, the Global X China Electric Vehicle and Battery ETF has 35 holdings, with US$168.52 million in assets under management. Its top 10 holdings are CATL (16.27%), BYD Company (12.22%), Shenzhen Inovance Technology (8.92%), Zhejiang Sanhua Intelligent Controls (4.48%), Fuyao Glass Industry Group (4.41%), Tianqi Lithium (4.16%), EVE Energy (3.89%), Guangzhou Tinci Materials Technology (2.89%), Ganfeng Lithium Group (2.76%) and Yunnan Energy New Material (2.48%).
The EV industry may be moving into its next chapter as part of its maturation, but the technology remains in its early stages of adoption, says Siaw.
“The long-term EV growth outlook remains positive due to structural tailwinds from government and corporate efforts. As the EV industry continues to mature, companies throughout the EV value chain are poised to potentially benefit, from lithium miners to battery producers and EV manufacturers.”
