Electric vehicle (EV) sales in China have surpassed conventional vehicles, marking a significant shift in the automotive industry. However, the Chinese EV market is now facing challenges related to price competition and overcapacity.
To address these challenges, Chinese brands are targeting international markets, particularly Southeast Asia, which shows great promise. In particular, the region requires significant infrastructure investment of up to $2.8 trillion by 2030, according to The Diplomat.
EV sales in Southeast Asia are also growing rapidly, led by brands such as China's BYD and Vietnam's VinFast. These brands are beginning to displace the dominance of internal combustion engine vehicles from Japanese and Korean companies.
According to Counterpoint Research, more than 70% of EV sales in the region come from Chinese brands, with BYD leading the market. In fact, in the first quarter of last year, 75% of all EVs sold in Southeast Asia were produced by Chinese companies, indicating a significant shift in the regional automotive market.
Demand for EVs in Southeast Asia will be largely met by Chinese companies, with their market share rising from 38% in 2022 to nearly 75% in 2023.
China's EV Expansion in Southeast Asia
Chinese electric vehicle (EV) manufacturers are expanding their presence in Southeast Asia by increasing production in Indonesia, Malaysia, and Vietnam.
BYD opened its first showroom in Vietnam in July 2023 and plans to build a manufacturing plant there, although these plans have been delayed due to the global market slowdown.
Indonesia also plans to produce 600,000 EVs by 2030 through partnerships with Chinese companies such as Neta, Wuling, Chery, and Sokon. Meanwhile, Malaysia will partner with Geely to establish an EV manufacturing hub in Tanjong Malim with a capacity of 500,000 vehicles by 2035.
Read also: Skepticism Grows Over Tesla's EV Ambitions in Southeast Asia
Regional Policies Supporting the EV Industry
The success of Chinese electric vehicles (EVs) is also due to domestic subsidies and China's "New Energy Vehicle Industry Development Plan (2021-2035)," which has influenced Southeast Asian countries to set ambitious targets for EV production.
Thailand, for example, aims to have zero-emission vehicles account for 30% of its total automotive production by 2030, and is striving to become a global EV hub.
Indonesia is actively attracting investment for EV battery production and plans to become a major EV battery producer by 2027. In addition, Malaysia will extend tax and duty exemptions for electric vehicles until 2025 and 2027.
Meanwhile, Vietnam is promoting EV adoption with subsidies for charging stations and EV buyers. The country currently has more than 150,000 charging stations, most of which are managed by VinFast. Vietnam also proposed a $1,000 rebate for NEV, plug-in electric, and solar car buyers in August 2023.
