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Creating a sustainable non fossil fuel-based automotive industry in the ASEAN region

A snapshot of preparations and policy initiatives by various countries

The automotive industry is evolving at a never-seen-before pace, and different countries are adapting to the changing dynamics. This write-up by Dr Deb Mukherji – MD at Omega Seiki Mobility, analyses the policy initiatives and efforts by the ASEAN countries to build domestic capabilities in the EV ecosystem and supply chain.

Automotive sales in the ASEAN region

After relatively muted sales during the pandemic in 2020 and 2021, the ASEAN automotive markets seem to be picking up. In the first nine months of 2022, the new vehicle sales in the 6 largest ASEAN markets (Indonesia, Thailand, Malaysia, Vietnam, Philippines and Singapore) increased by around 30% to 2,456,866 units from 1,883,543 units in the first 9 months of 2022.

Vehicle sales in the ASEAN region, 2019-2022
Country2019202020211-9 20211-9 2022% Change
Source: JustAuto

International Renewable Energy Agency estimates that 20 per cent of all vehicles in the ASEAN region will be electric by 2025.

There is even more potential for growth considering the region’s total population of more than 680 million people and a burgeoning middle class. Automotive manufacturing is mainly led by Thailand, Indonesia, Malaysia and Vietnam, with a combined 85% share of all vehicles produced in the ASEAN region.

Let’s look at policy initiatives and efforts by leading ASEAN countries to adopt electric vehicles and carve their place in the evolving automotive ecosystem.


Thailand has embarked on an EV journey with a target of manufacturing 30% EVs out of total domestic vehicle production (725,000 units/year) by 2030. Several Chinese companies are looking to enter the space traditionally dominated by the Japanese. BYD has announced a manufacturing plant in Thailand that is expected to start manufacturing in 2024 with an annual capacity of about 150,000 units. The government is focused on creating a large-scale EV manufacturing ecosystem. Since Thailand already has large-scale tier 1 and tier 2 companies, manufacturing EV parts would be easier.

On the demand side, EV subsidies of THB 70,000-150,000 per unit have been rolled out along with reductions in excise, road, and import taxes. The import duty on electric vehicles has been slashed by 40% on completely built units.


Indonesia, being the world’s leading Nickel producer, wants to set up a complete supply chain for battery manufacturing. I see Indonesia taking the lead in Li-ion battery manufacturing with CATL and a consortium led by LG announcing an investment of more than $7 billion. Indonesia wants to become a leading battery player with 130 GWh capacity, out of which 50 GWh will be for exports by 2030. They expect an investment of $33 billion by 2033 in the battery space. Indonesia’s president Joko “Jokowi” Widodo, recently called for the country to build an industrial ecosystem for lithium-ion batteries. Subsequently, in 2020, the government banned nickel ore exports in preparation for the increased demand in the battery supply chain.

In March 2022, Hyundai Motor Group launched its new automotive plant in Indonesia that will produce the first locally assembled EV. In June 2022, President Widodo said that the government has been in talks with Tesla, Ford and other car companies to set up manufacturing facilities. The Indonesian government is giving a 20-year tax break to companies in the EV segment. Indonesia aims to export 200,000 EVs by 2025, which will comprise almost 20 per cent of all its car exports.

To boost EV sales within the country, Indonesia is planning to introduce purchase subsidies in 2023, said a Bloomberg report. The country aspires to have 2.5 million EV users by 2025.


Vietnam has signed an agreement with China to develop electric cars as well as batteries, with Vinfast taking the lead with Gotion China. Vietnam’s vast reserves of nickel also make it a prime candidate for battery production. Vinfast, Vietnam’s largest private conglomerate, began constructing a facility in December 2021 to produce 100,000 EV batteries annually for sale and use in its own vehicles. Vinfast could emerge as a challenger to the big names in the electric car industry with its global aspirations, including starting a factory in the US. It has announced plans to invest $2 billion to start EV manufacturing in North Carolina and $200 million to establish a US headquarters in Los Angeles.


Malaysia has set up a rare earth refining facility with help from Japan. Once China cut off supplies to Japan owing to the Senkaku Islands dispute, Japan invested in Malaysia, and now Lynas Malaysia BHD is a leading exporter of rare earths.


Singapore has implemented several incentives to encourage domestic adoption. In 2021, the Transport Ministry allocated about $31 million in rebates to lower the upfront cost of purchasing an EV, resulting in an increase in the proportion of EV registrations to 4.4 per cent in 2021. In addition, the Transport Authority has set a target of installing 60,000 charging points across the island by 2030 to meet expected demand.

Concluding thoughts

I see that besides India being at the forefront of EV adoption in Asia, these ASEAN countries will take the lead in adopting EVs and setting up a supply chain. While China is supporting most ASEAN countries, only India is taking an independent technology route, with business groups like Reliance, Tata, JSW, and Suzuki entering the battery and EV tech space. The Indian government urgently needs to relook into the rare earth policy to reduce dependence on China. India also needs to set up at least 10 Giga factories for battery production with a capacity of 500 GWh by 2030.

With the combined market size of India and ASEAN countries and a robust non-Chinese battery materials supply chain, Chinese dominance can be challenged.

As energy demand increases significantly owing to the increasing population and purchasing power of most of the ASEAN countries, it is important for the region to become energy secure. This is becoming increasingly important, given the shifting global geopolitical situation. Creating a self-sufficient large-scale electric vehicle ecosystem is the answer to this.

The key drivers to building a robust EV ecosystem in the ASEAN region would be the following:

– Government incentives to ramp up demand as well as create a supply chain

– Availability of key raw materials like Nickel, particularly in Indonesia

– Availability of already robust automotive components manufacturing ecosystem in Thailand, Indonesia, Malaysia and Vietnam

– Export-driven economies of Thailand, Singapore, and Vietnam.

Key challenges to EV adoption would remain the ability of these countries to scale up the manufacturing, setting up large-scale charging infrastructure, making EVs affordable to the mass market and creating necessary human resource pools required for the new age industry.

This article was first published in EVreporter Jan 2023 magazine, which can be accessed here.

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