An intense competitive battle is starting to take shape in Southeast Asia's electric vehicle (EV) market between incumbent Japanese automakers and new entrants from China, Korea, and domestic players in the region.
With a population of about 675 million, this is a prize worth fighting over. Annual passenger vehicle sales in the region are expected to more than double by 2040 to about five million as the population and these economies grow.
Today, affordable cars from Japanese brands including Toyota, Honda, Mitsubishi, Daihatsu, and Mazda dominate the passenger vehicle market. About 78% of all cars and sport utility vehicles sold in 2019 in Indonesia — the largest auto market in the region — were priced below US$20,000 (RM92,211).
The passenger EV market in Southeast Asia is still small. Fewer than 16,000 EVs were sold in the region last year out of the 6.6 million delivered worldwide. However, the shift to EVs is opening opportunities for companies like SAIC, Wuling, Great Wall, BYD, Hyundai, and VinFast to expand in this growing region as their Japanese counterparts still hold back on offering more battery-electric vehicles (BEVs) to consumers.
Until last year, governments in the region did not have attractive subsidies or stringent fuel economy regulations that have helped support EV adoption in Europe and elsewhere. That meant dominant players like Toyota and Honda did not aggressively pursue EVs in the region. Indeed, almost no global automakers today offer EVs at price points that can appeal to the mass market and achieve sufficient economies of scale in the region.
That may be about to change. Chinese automakers have several affordable EV models that they manufacture and sell in China, and they are beginning to bring many of these to Southeast Asia. Great Wall Motor and SAIC's MG Motor have introduced three EVs in Thailand that are priced between US$20,000 and US$30,000. Wuling, another Chinese automaker known at home for its very successful Hongguang Mini EV, introduced a small EV priced from US$16,000 in Indonesia. Many of these models are already popular among consumers and have long wait times for delivery.