Evaluating Cost-Effectiveness of Electric Motorcycle Investments and Charging Infrastructure in Malaysia

Battery Capacity or Charging Infrastructure? Cost Modeling Study to Evaluate Investments of Electric Motorcycles and Supporting Infrastructure in Malaysia

Abstract: Conventional motorcycles with internal combustion engines have significantly contributed to air pollution in Southeast Asia, presenting challenges in meeting the net-zero emissions targets ratified by ASEAN countries. In response, ASEAN nations have begun adopting electric vehicles, particularly electric motorcycles (EMs). However, implementing EMs faces several hurdles, notably limited battery range and inadequate charging infrastructure. Addressing these challenges necessitates substantial investments from EM users and infrastructure providers. The government plays a crucial role in enhancing the investment climate for the EM ecosystem through financial incentives. This research aimed to model cost variables to assess the cost-effectiveness of government subsidies for EMs and their charging infrastructure in Malaysia using an equivalent annual cost (EAC) model, determining whether increasing battery capacity or expanding charging infrastructure would be more beneficial. Data were collected via interviews with EM dealers, government agencies, electric vehicle experts, and surveys of EM users in Malaysia. This study found that Scenario 1 (subsidizing EM purchases and charging infrastructure while excluding battery purchase subsidies) is an optimal strategy for the government. It reduced the EAC value, a cost burden for EM users, by 10.06% for battery swap system users and 5.84% for direct charging system users. Additionally, the research indicated that promoting the use of EMs with battery swap systems is more profitable than those with direct charging systems. These findings provide insight into the most cost-efficient subsidy scenario to address existing challenges, creating a win-win situation for both EM users and the government, thereby accelerating EM adoption as part of the government’s goal to achieve net-zero emissions.

Keywords: cost modeling; electric motorcycle; charging infrastructure; net-zero emission; investment evaluation

1. Introduction

Transportation is a significant contributor to carbon emissions in Southeast Asia. In Malaysia, the transportation sector is the second-largest carbon-emitting sector, contributing 65,000 GgCO2eq, which represents 21% of total emissions. High carbon emissions accelerate global warming, necessitating solutions to mitigate carbon emissions in the transportation sector. Electric vehicle innovation is one option considered environmentally friendly and zero-emission.

Malaysia has begun adopting electric vehicles, particularly electric cars and EMs. The Malaysian government supports this transition through the Low Carbon Mobility Blueprint (LCMB) 2021–2030, which offers tax exemptions for electric vehicles, incentives for developing charging infrastructure technology, and a national target of 10,000 charging points annually by 2025. The LCMB also encourages EM adoption, viewing them as the most efficient mode for personal motorized transport. The government’s initiative, “Skim Galakkan Penggunaan Motosikal Elektrik,” launched under the Belanjawan 2024 initiative, aims to accelerate EM adoption by providing a rebate of MYR 2400 (USD 552) for EM purchases by individuals with annual incomes below MYR 120,000 (USD 27,600).

Despite these efforts, EM adoption remains relatively low in Malaysia. The public perceives EMs as having weaknesses, including slow battery charging speeds, short ranges, and limited charging station facilities. Implementing effective policies such as purchase incentives, tax exemptions, and subsidized public charging infrastructure is crucial but challenging due to the high costs involved.

Previous research has indicated that extending the driving range by increasing battery capacity reduces the need for charging infrastructure but raises costs for users. Conversely, enhancing charging infrastructure alleviates concerns regarding limited infrastructure and driving range but increases costs for charging operators and the government.

For case studies in Malaysia, previous cost model studies for electric vehicles have focused primarily on electric cars, with limited exploration of EMs and their charging infrastructure. This study aims to fill that gap by formulating a cost model for EMs in Malaysia, focusing on government subsidies and their impact on user costs and adoption rates.

2. Materials and Methods

This research conducts a techno-economic analysis to formulate a cost model for electric motorcycles in Malaysia, evaluating the feasibility of subsidizing either battery purchases or charging infrastructure development. The study utilizes a variable framework from previous research to design survey questions, collecting data through expert opinions, questionnaires, and secondary sources.

2.1. Survey Design

The survey was crafted based on a cost variable framework from previous studies, focusing on gathering data to validate the cost model. The equivalent annual cost (EAC) model was formulated to assess the costs associated with EM ownership and charging infrastructure.

2.2. Data Collection

Data were collected through expert interviews, questionnaires for EM users, and secondary data from various literature sources. The survey aimed to gather insights on the EM business ecosystem, infrastructure challenges, and user costs.

2.3. Cost Modeling

The cost model formulation involved creating equations based on identified cost variables affecting the EM ecosystem. This study focuses on customer-oriented and social-oriented costs while considering the charging infrastructure costs.

2.4. Simulation Scenarios

Five scenarios were defined for simulation, focusing on the various combinations of subsidies for EM purchases, battery purchases, and charging infrastructure.

2.5. Model Simulation and Results Analysis

The simulation model tested the five defined scenarios, analyzing the results to determine the optimal subsidy strategy for the government while considering the cost burdens on EM users.

3. Results

The survey results indicated various insights into the current state of EM adoption and user perceptions. The cost model revealed specific EAC values for different scenarios, highlighting the trade-offs between user costs and government subsidy burdens.

4. Discussion

The analysis of results indicated that Scenario 1, which subsidizes EM purchases and charging infrastructure but not battery purchases, was the most cost-efficient option. This scenario aligns with the government’s goals of increasing EM adoption while minimizing subsidy costs.

5. Conclusions

This study concludes that the optimal strategy for promoting EM adoption in Malaysia is to focus on developing charging infrastructure while providing financial incentives for EM purchases, excluding battery purchase subsidies. These findings support Malaysia’s Low Carbon Mobility Blueprint and contribute to the broader goal of achieving net-zero emissions. Future research should explore dynamic cost models and additional subsidy scenarios to further enhance the understanding of EM adoption in Malaysia.

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