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Low prices to rev Asia automakers’ e-vehicles biz

Cheap electric vehicles will help Asia’s carmakers to carve out a greater market share, but this is currently not possible with costly lithium-ion batteries. Add to that the lack of charging infrastructure in many countries across the region mean manufacturers should stay cautious when producing electric cars.

Kevin See, senior analyst at Lux Research, said one of the main problems hindering the production of cheaper electric cars is the high cost of lithium-ion batteries–the key component that powers these vehicles. While the prices of these batteries will likely drop over time, it will be slow and would hinder carmakers from lowering their prices, he noted.

Agreeing, Peter Harrop, chairman of IDTechEx, said lower prices for electric vehicles will be key for the region’s automakers. Being the first in the market to sell affordable, plug-in hybrid cars and pure electric ones with longer driving ranges are definitely compelling advantages, he said.

It will be some time before such a situation is realized though, with See cautioning carmakers here from expanding too quickly. This is because the market is still in a very early stage of maturity and adoption is very slow.

“Increasing the production capacity without enough demand can lead to overcapacity, which is a major financial burden for companies,” he added

China Daily, citing a report by McKinsey & Co, reported in October that China’s electric vehicles industry has contracted in the second quarter of this year. Only 235 such vehicles were sold in the world’s largest auto market, which was a 31 percent drop from the 343 units sold in the first quarter.

Even top electric cars markets such as the United States and Japan registered only 7,931 and 4,240 units, respectively, it noted.

According to Harrop, Japan leads the electric vehicles market in Asia both in terms of technology and sales volume. See added Japan is most advanced in this field because of its “significant” expertise in lithium-ion batteries.
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