Electric Two-Wheelers Find Increasing Demand in Southeast Asia, the World’s Third-Largest Two-Wheeler Market**
Since 2019, Southeast Asian countries, led by Indonesia, Thailand, and Vietnam, have introduced policies to curb the use of traditional fuel-powered motorcycles in response to carbon emissions and environmental pollution. This has accelerated the transition from gasoline to electric vehicles. Many companies have begun to ride the wave of these policies, launching new products tailored to the needs of the Southeast Asian market. The electric two-wheeler market is booming, attracting investment interest and new entrants.
### Southeast Asia’s Two-Wheeler Market: A High-Demand, Rapid-Growth Arena
Generally speaking, two-wheelers include bicycles, electric two-wheelers, and fuel-powered motorcycles. Electric two-wheelers can be further divided into electric bicycles with pedal-assist, mopeds, e-scooters, and electric motorcycles. The difference between mopeds and e-scooters is minimal, with the latter typically having a slightly higher speed and weight. This article focuses on the electric two-wheeler and fuel-powered motorcycle markets in Southeast Asia.
Globally, the cost-effectiveness and convenience of two-wheelers have made them a popular choice for daily transportation. Furthermore, as governments worldwide intensify efforts to limit carbon emissions and promote low-carbon lifestyles, international demand for electric two-wheelers is rising. McKinsey predicts that by 2029, the global two-wheeler market will have a compound annual growth rate of 8.7%, reaching approximately $218 billion.
According to McKinsey’s research, the electrification rate of two-wheelers has remained below 5% due to various challenges, such as high purchase costs, the relatively low performance of internal combustion engine (ICE) variants, limited product options, and an underdeveloped charging ecosystem. However, with advancements in battery technology, enhanced power performance, the development of charging/swapping infrastructure, and lower costs, the adoption of electric two-wheelers is accelerating. Additionally, the growth of electric two-wheelers has benefited from government regulatory measures, such as fuel price influences and electric vehicle purchase subsidies, encouraging consumers to shift toward electric vehicles. For instance, in 2021, electric two-wheelers accounted for only about 2% of sales in ASEAN countries. However, McKinsey predicts that by 2030, 30% of two-wheelers worldwide will be electric.
In Southeast Asia, due to the lack of public transportation infrastructure, the prevalence of densely populated cities, and the fact that urban short-distance travel usually ranges between 10-20 kilometers, motorcycles are the most popular mode of transportation. According to ASEANstats, there are currently about 250 million motorcycles in Southeast Asia. With a population of over 600 million, this means that there are 1.25 motorcycles for every three people in the region. Moreover, a large number of new two-wheelers are gradually entering Southeast Asian households every year.
The Southeast Asian two-wheeler market reached a record peak of 15 million units in 2019, accounting for nearly 25% of the global market. According to Statista, in 2022, new motorcycle sales in Southeast Asia reached approximately 10.6 million units, making it the world’s third-largest market after China and India. In the first six months of this year, ASEAN motorcycle industry sales reached 7.5 million units, a 14.9% increase, making it the fastest-growing region globally.
Statista also forecasts that the ASEAN motorcycle market will generate $26.41 billion in revenue this year. From 2023 to 2027, the compound annual growth rate for revenue is expected to be 6.01%, with the market size reaching $33.35 billion by 2027. The largest segment within this market is road motorcycles, with an estimated market size of $17.34 billion in 2023.
While Southeast Asia’s motorcycle sales lead the world, the potential for electric motorcycles in the region is also significant. As of 2022, electric motorcycles accounted for less than 1% of the Southeast Asian market, leaving ample room for growth. With the push for “fuel to electric” policies, the Southeast Asian electric two-wheeler market is currently in its early stages and entering a period of rapid growth. A report from the International Renewable Energy Agency (IRENA) indicates that by 2025, approximately 20% of vehicles on Southeast Asian roads will be electric, including 59 million two- and three-wheelers and 8.9 million four-wheelers.
### Overview of Two-Wheeler Preferences and Market Opportunities in Southeast Asian Countries
Southeast Asia stands out in two-wheeler sales, with Indonesia being the largest single market. Motorcycle sales in Southeast Asia are concentrated in Indonesia, Vietnam, and Thailand. Last year, motorcycle sales in these three countries ranked among the top three. As of the first half of this year, Indonesia’s two-wheeler sales grew by 41.5%, the most significant increase among ASEAN countries, followed by Vietnam, the Philippines, and Thailand, with Malaysia and Singapore ranking lower.
Zhu Zhengyi, an Investment Professional at East Ventures, told 7:5 Degrees that overall, travel patterns in Southeast Asia are very similar, primarily focused on urban commuting and delivery services. In more dispersed regions outside major cities, there is a greater demand for electric two-wheelers with longer ranges, leading to higher expenditures.
From an investment potential perspective, Zhu Zhengyi also believes that Indonesia, Vietnam, and Thailand, with their high sales volumes, are the three key markets to watch. The Philippines and Malaysia are also worth noting because the Philippines, outside Manila, has a more dispersed population, leading to higher demand for electric vehicles with long-range and large-capacity batteries. Meanwhile, Malaysia has higher purchasing power, and the local government and businesses are actively supporting the development of electric two-wheeler infrastructure.
**Indonesia: Southeast Asia’s Largest Two-Wheeler Market**
In densely populated, traffic-congested Indonesian cities, motorcycles have become the most effective mode of transportation. According to Raditya Wibowo, Co-Founder and CEO of Indonesian electric two-wheeler company MAKA Motors, motorcycles hold a special place in Indonesian households, with some users even parking them in their living rooms for security. “In some cases, the value of a motorcycle even surpasses that of a house,” he noted.
Considering the affordability and flexibility of motorcycles for daily commuting, they best meet most users’ needs for daily travel and short-distance trips. Consequently, motorcycles with lower power and speed, particularly those under 125cc, are the most common in Indonesia. Regarding purchasing preferences, Statista’s research shows that consumers prefer to buy new vehicles over second-hand ones due to the availability of various loan options.
Indonesia’s “fuel to electric” encouragement policies are further driving the development of electric two-wheelers in the country. To reduce carbon emissions, the Indonesian government has launched a plan to convert fuel-powered two-wheelers into electric ones, aiming to have 20% of fuel-powered motorcycles converted to electric vehicles by 2025, with a target of reaching 1.8 million electric motorcycles. Indonesia has also pledged to stop selling fuel-powered vehicles entirely by 2050, allowing only electric vehicles and electric motorcycles to be registered for use. The local government is already taking action to encourage its citizens to choose electric vehicles. In March, Indonesia announced a subsidy of 7 million Indonesian rupiahs (approximately 3,200 yuan) per vehicle for the purchase of 250,000 electric motorcycles this year, including 200,000 new electric motorcycles and 50,000 conversions of traditional fuel-powered motorcycles.
Moreover, Indonesia is actively promoting the establishment and improvement of its domestic electric vehicle supply chain. Nickel ore is an essential component of electric vehicle batteries, and Indonesia plays a crucial role in the global electric vehicle supply chain due to its rich nickel ore resources. As more established foreign electric vehicle industries relocate to Indonesia, the electric two-wheeler sector is expected to see continued improvements in technology, batteries, and other aspects. In addition to electric motorcycle manufacturers, Indonesian battery swapping startups are also striving to install and upgrade battery-swapping stations to meet the charging needs of more users in the future.
Currently, the Indonesian two-wheeler market is mainly dominated by Japanese brands. Honda leads with over 68% market share, though its sales growth last year (1.8%) was lower than that of Yamaha (+10.2%). The Indonesian electric vehicle startup Gesits has also performed well, ranking just behind Japanese brands in market share. Gesits controlled 26% of the Indonesian electric motorcycle market last year and has over 70 dealer networks across the country.
Statista reports that since Indonesia’s domestic two-wheeler production capacity is sufficient to meet domestic demand, exports have become increasingly important for manufacturers. Over the past decade, the number of motorcycles in Indonesia has increased dramatically, with motorcycle exports reaching 743,000 units last year. The Philippines is the primary destination for Indonesian motorcycle exports, followed by Vietnam and Thailand. Regarding export brands, Yamaha motorcycles produced in Indonesia have been the most popular over the past few years.
**Vietnam: Higher Electrification Rate Than Other Southeast Asian Countries**
According to data, Vietnam’s electrification rate is significantly higher than that of major sales countries like Indonesia, the Philippines, and Thailand. In 2020, the penetration rates of electric two-wheelers in Vietnam, the Philippines, Indonesia, and Thailand were 8.54%, 1.34%, 1.1%, and 0.1%, respectively.
Vietnam is densely populated and has a rapidly growing economy. Economic growth has led to infrastructure improvements, creating favorable conditions for the development of the two-wheeler industry, and the demand for urban transportation solutions among local residents has surged. Electric two-wheelers have become the primary mode of transportation, especially in urban areas.
According to the General Statistics Office, Vietnam’s motorcycle production exceeded 3.32 million units in 2022, with motorcycle sales