The global automotive industry is accelerating its move toward sustainable mobility, and Southeast Asia is aligning with this transition. The adoption of electric vehicles (EVs) in the region is gaining traction, presenting promising opportunities to promote more sustainable, inclusive, and resilient growth. By capitalizing on their manufacturing strengths, Southeast Asian nations can significantly contribute to the global EV market. Many countries in the region are already establishing ambitious targets to tap into the potential of EV manufacturing, driven by the surge in both domestic and international demand.
According to Statista, the Electric Vehicles market in Asia is projected to generate an impressive revenue of US$342.1 billion in 2024. This market segment is expected to experience steady annual growth, with a compound annual growth rate (CAGR) of 5.77% from 2024 to 2028, leading to a projected market volume of US$428.2 billion by 2028. Unit sales in Asia’s Electric Vehicles market are expected to reach 9.30 million vehicles by 2028. On a global scale, China is set to generate the highest revenue, with an estimated US$319 billion in 2024.
In 2023, electric vehicles (EVs) accounted for 18% of global car sales, a significant increase since 2017, with the largest markets being the U.S., Europe, and China, where over 24% of new passenger vehicles sold in the fourth quarter of 2023 were EVs. In contrast, the ASEAN EV market is still emerging, representing about 2% of global sales in 2021. Within ASEAN, Thailand led with 78.7% of the region’s EV sales, followed by Indonesia with an 8% share as of the first quarter of 2023. Thailand also saw a notable EV adoption rate, with nearly 13% of new car sales being EVs by the fourth quarter of 2023. Looking forward, EV sales are expected to grow significantly in countries like Thailand, Indonesia, and Vietnam, driven largely by the increasing presence of Chinese automakers, with BYD leading the ASEAN market, capturing over 25% of sales as of the second quarter of 2023.
The growing EV market in ASEAN is driven by shifting consumer behaviors and supportive government initiatives. Consumers are increasingly attracted to EVs due to lifestyle changes focused on reducing fuel costs, environmental concerns, and the appeal of advanced innovations and performance features. Governments in the region are also promoting EVs as part of their net-zero emissions commitments, with many ASEAN countries making carbon neutrality pledges through laws, policy documents, and declarations, often setting target years to ban internal combustion engines (ICE). These factors are expected to continue fueling the ASEAN EV market, which holds significant growth potential given the low adoption rates in most countries, the generally inadequate public infrastructure that necessitates personal vehicles, and the region’s status as the seventh-largest automotive manufacturing hub globally. A 2024 EY-Parthenon study predicts that EV sales across the ASEAN-6 markets will see rapid growth, with a compound annual growth rate (CAGR) of 16% to 39% between 2021 and 2035, with Indonesia and Thailand leading the way.
Scalability and automotive expertise are essential for thriving in the EV industry, with key factors divided into demand-side and supply-side elements. Demand-side factors, such as domestic market potential, charging infrastructure, and financial incentives, influence manufacturers’ ability to achieve economies of scale, while supply-side factors highlight a country’s production advantages along the EV supply chain. Thailand currently leads in EV market penetration with a well-established consumer base and extensive incentives, but Indonesia’s EV market is expected to grow significantly over the next 5-10 years due to its larger population, increasing consumer interest, supportive government policies, and push for EVs in the new capital city, Nusantara. Despite both countries having limited charging networks, government incentives are driving significant expansion in this area.
Opportunities in ASEAN’s EV market vary by segment and are influenced by consumer preferences, production capacity, infrastructure, and policy. Electric four-wheelers (E4Ws) are gaining traction, while electric two-wheelers (E2Ws) remain popular among lower-income groups, especially in high-urbanization areas with traffic issues. Higher-income countries tend to adopt E4Ws faster, while E2Ws are favored in congested urban areas. Production and charging infrastructure are critical, with E4Ws needing more extensive networks. Indonesia leads in E2Ws due to its large, urbanized population and growing local battery manufacturing, whereas Thailand is more favorable for E4Ws and electric commercial vehicles, bolstered by its established automotive industry and higher incomes. Both countries face challenges in adopting electric pickups, particularly in less urbanized, lower-income areas.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech