Cleaner Vehicles, Faster Transition: APAC’s Transport Opportunity
Increasing the market penetration of zero-emission vehicles, such as electric vehicles (EVs) and fuel-cell vehicles (FCVs), could help accelerate the energy transition by shifting market demand away from fossil fuels toward cleaner energy sources.1 Challenges remain, however. While EV chargers reduce dependence on gas stations, many still rely on carbon-intensive fossil-fuel-fired power generation.2 Furthermore, long charging times or queue congestions at charging stations could make EVs less practical for long-distance drivers at present.3 Plug-in hybrid vehicles (PHVs) and hybrid electric vehicles (HEVs) could serve as transitional solutions and bridge the gap to cleaner energy systems.
Companies driving the shift
Makers of these vehicles can capitalize on the rising demand for clean-transportation solutions across Asia-Pacific markets.4 Of the 3,874 constituents of the MSCI AC Asia Pacific Investable Market Index (IMI), 150 companies (around 4%) provide such solutions. Among them, EV manufacturers and component makers like Zhejiang Leapmotor Technology Co. Ltd. and LG Energy Solution Ltd. posted a compounded annual growth rate (CAGR) of over 150% in total sales from 2020 to 2023, albeit from a relatively low starting base. Li Auto Inc., which generated more revenue from HEVs than EVs, recorded a CAGR of over 100% in the same period. EV makers such as Ola Electric Mobility Ltd., Xpeng Motors, Olectra Greentech and BYD Co. reported a CAGR of over 50%. Meanwhile, Japanese carmakers such as Toyota Motor Corp. and Honda Motor Co. Ltd. are developing new technologies such as solid-state batteries, fuel-cell trucks, liquid-hydrogen cars and vehicle-integrated perovskite solar cells to help shape future market demand.5
For investors, the accelerating demand for clean-transportation solutions across APAC presents both growth opportunities and strategic challenges. Companies driving innovation in EVs, hybrids and supporting technologies may be well positioned to benefit from shifting consumer preferences and policy support, while those lagging in adaptation could face increased transition risk.
Data as of March 31, 2025. Source: MSCI ESG Research
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1 “Zero-Emission Vehicles Factbook,” Bloomberg New Energy Finance, December 2023.
2 “In the right circumstances, could a hybrid car be ‘cleaner’ than an electric vehicle?” MIT, Jan. 14, 2025
3 “Pragmatic and idealistic reasons: What drives electric vehicle drivers' satisfaction and continuance intention,” Science Direct, April 2023.
4 “Global EV Outlook 2024,” International Energy Agency, April 2024.
5 “Japan rolls out fuel subsidy for hydrogen trucks,” Nikkei Asia, May 19, 2025.
“Honda's solid-state batteries promise to double EV ranges,” Nikkei Asia, Nov. 22, 2024.
“Toyota Returns to Fuji 24H with Liquid Hydrogen Car,” Fuel Cells Works, May 29, 2025.
“EneCoat and Toyota Push Solar Innovation with 30.4% Efficient Perovskite Tandem Solar Cell,” RTS Corp., March 19, 2025.
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