By Wenbo Yuan and Timothy Wong
Governments across the globe have announced aspirational targets to achieve net zero emissions by different timelines. To achieve this, accelerating the electrification of the mobility sector, which is one of the primary sources of GHG emissions, is critical. In line with the global electrification trends, Southeast Asia has jumped on the EV bandwagon. How fast and how big can EVs grow in Southeast Asia? How would that impact the industry? How should we position ourselves to seize new opportunities and navigate challenges?
Despite the ominous global news headlines about "slowing" EV markets, Southeast Asia has witnessed accelerated growth in EVs in recent years. By 2030, the share of NEV (including HEV, PHEV an BEV) is expected to reach 38% in Southeast Asia. This longer-term growth trajectory of EVs remains intact and is unstoppable. Transition to EV will undoubtedly disrupt the status quo of the Southeast Asian automotive industry and create a new normal.
The Southeast Asian passenger vehicle (PV) market achieved a total production and sales volume of 4.2 and 3.3 million units, respectively, in 2023. The region is back on the growth path after the severe impact of the COVID-19 pandemic. The growth outlook remains positive, with the PV segment poised to grow at a stable annual rate of 4% and 5% for production and sales, respectively, from 2025-2030.
Southeast Asia remains a strategically important market and an integral part of the global automotive supply chain. SEA is one of the few regions that are sustaining a clear PV market growth. The region consists of many countries at different levels of automotive industry development and demand. These factors make justification of investing and expanding in the region / specific country both an opportunity and a challenge. To the incumbent Japanese automotive players, SEA has long been (and will continue to be) an important market, regional supply chain node and production hub. Japanese brands have been dominating the region, with Toyota, Honda, Nissan, and others being well-known «household» brands for decades. Defending Japanese players’ dominance and safeguarding their investment interest in SEA is a strategic necessity, not a choice. For other global players and new challengers, particularly Chinese automotive players, SEA offers both strategic and business opportunities:
Transition to EV will undoubtedly disrupt the status quo of the Southeast Asian automotive industry. Four imminent shifts are expected:
EV development is unstoppable and will disrupt the automotive industry status quo in Southeast Asia. Shifts in customer needs, competitive dynamics, sales model innovation, aftersales services and aftermarket impact will pose existential threats to some existing businesses while creating new opportunities. Automotive decision-makers have to act now to future-proof their business models. The easiest but most detrimental decision is to remain business as usual.
" Transition to EV will disrupt the status quo of the Southeast Asian automotive industry and create a new normal. Automotive decision-makers have to act now to future-proof their business models. "
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