ELECTRIC vehicles, also widely known as EV, refer to vehicles that are either partially or fully powered on electric power. Compared to traditional fossil fuel vehicles, EVs not only offer users benefits such as low ongoing costs and low maintenance needs, but are also environmentally-friendly as they reduce carbon footprint by using electricity instead of fossil fuel.
Amid rapidly changing technology and increase in public environmental awareness, EVs are moving steadily toward the spotlight in the automation industry. The shift towards EVs are now in full swing globally with countries such as the US, China and Germany leading the way.
Among which, China is the largest market in terms of EV sales (Figure 1), where its total sales of battery EVs and plug-in vehicles amounted to 1.25 million in the year 2020. That being said, only 6% of new passenger car sales in China were EVs in 2020 (Figure 2).
Despite the US being the third biggest market in terms of EV sales in 2020, the adoption rate is only 2%. These statistics suggest that there are still huge growth opportunities for EVs even in the huge markets of China and US.
On the other hand, despite being a major oil exporter, Norway is the country with the highest share of plug-in and EV to new passenger car sales in the year 2020 (Figure 2), and it was the first time that fully electric cars outsold the combined volume of models containing internal combustion engines throughout a whole year.
This shows that with government incentives, environmental education and awareness and not to mention established EV infrastructure, that high EV adoption is highly possible.
Nevertheless, in most countries outside of these ones stated here, their respective EV markets are still at a nascent stage while adoption is still very low. In other words, there is still a lot of potential growth for the EV segment should adoption rates pick up and mirror the trends seen in countries such as US, Germany and China.
In order to achieve what the leaders have done so far, it would require commitments from respective governments and other global policymakers to promote the use of EVs.
In Malaysia, owning an EV is not as prevalent yet when comparing to other countries. However, there are local companies that have positioned themselves in the EV value chain and could benefit from this secular trend given the growing demand for EV-related technology and products across the globe.
Here are three Malaysian stocks that can give you exposure to the growing EV market.
- Malaysian Pacific Industries Bhd
Malaysian Pacific Industries Bhd (MPI) is engaged in manufacturing, assembling, testing and selling integrated circuits, semiconductor devices, electronic components, and lead frames.
They have been investing in Silicon Carbide (SiC) and Gallium Nitride (GaN) wafer technologies to focus on growing its power packaging segment with its customers. In FY 2020, the company entered into a collaboration with the key player in the high-power integrated circuit market to launch its first high power packaging line.
This collaboration brings in new packaging and assembly technology capabilities to MPI. With higher efficiency and advanced technologies, it enables the company to carry out its power packaging services efficiently and cater to greater demand in the automotive segment as the proliferation of EVs will continue to push more semiconductors requirements.
The company is undergoing the second phase of level two expansion at Carsem Suzhou, it is also seeking a new site in China by the end of this year for its silicon carbide related product in order to cater to the greater demand in power management applications for EVs.
- Greatech Technology Bhd
Greatech Technology Bhd operates in a single segment of the sale of automated equipment together with the provision of parts and services. Its product ranges from single automated equipment up to a production line system that comprises multiple automated types of equipment. It offers its products to various industries such as solar, electronic devices, semiconductor, life science, energy storage, and glass substrate.
In the year 2020, Greatech Technology has successfully penetrated into the EV energy storage industry despite challenging end-market conditions. Notably, the group’s revenue grew by 80.41% to RM95.14 million in the latest quarter. Greatech Technology has highlighted that their stellar performance in the most recent quarter was attributed to the higher revenue recognised for production line systems in the EV energy storage industry. At this juncture, the Group has four customers in the EV energy storage business from the USA and Europe markets.
- D&O Green Technologies Bhd (Industry: Technology)
D&O Green Technologies Bhd, along with its subsidiaries is involved in the manufacturing and merchandising of semiconductors’ components. It is also involved in the development of semiconductor application technology, installation, electronic components, electrical equipment for lighting, electronic display screen, and lighting fittings.
With the proliferation of EVs, the company is now in a good position to capture the bigger demand from the EV industry as it manufactures smart LEDs (which is a crucial component for EV) for this sector. Over the past few quarters, the fallout of the pandemic was still the major factor of dragging the performance of D&O.
However, the company is having an optimistic view on the market outlook as the world economies are showing signs of steady improvements and global car demand is firmly on a recovery path.
The company is also targeting to grow its capacity by 20% to 30% annually over the next five years in order to cater to the overwhelming LED demand as more new car models are being rolled out, especially in the EV segment. Therefore, it is expected to see steady growth in terms of the top line and bottom line of the company in the upcoming years. – Aug 13, 2021
iFAST Capital Sdn Bhd provides a comprehensive range of services such as assisting in dealing, investment administration, research support, IT services and backroom functions to financial planners.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
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