An intense competitive battle is starting to take shape in Southeast Asia’s electric vehicle 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 5 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 percent of all cars and SUVs sold in 2019 in Indonesia — the largest auto market in the region — were priced below $20,000.
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 such as 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 to consumers.
Until last year, governments in the region didn’t 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 didn’t 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.