ASEAN possesses the essentials necessary to establish itself as a thriving hub for EV manufacturing. Indonesia — the largest country in the region — boasts the world’s largest nickel deposits. It is also a major producer of tin and copper which are essential for EV batteries.
Thailand — the largest producer and market for EVs in the region — is offering incentives to establish itself as an EV production base. This strategy will result in lower import duties and make locally produced EVs more affordable.
Electric vehicle (EV) popularity has been surging as countries increasingly incentivise their citizens to transition to EVs to reduce carbon emissions. China leads the way, manufacturing approximately 44 per cent of all EVs between 2010 and 2020 and 77 per cent of lithium-ion batteries in 2022. But the ongoing global supply chain diversification will transform this landscape, presenting a remarkable opportunity for ASEAN.
Key Takeaways
- ASEAN countries, such as Indonesia, Vietnam, and Thailand, have the potential to establish themselves as thriving hubs for electric vehicle (EV) manufacturing due to their abundant resources, government incentives, and commitment to developing a regional EV ecosystem.
- The implementation of the ASEAN leaders’ declaration, which focuses on aligning regional EV standards and nurturing human capital, is crucial for cultivating a well-connected and competitive EV ecosystem in the region and challenging the dominance of Chinese and South Korean manufacturers.
- To kickstart the regional EV initiative, ASEAN governments should prioritize enhancing their national EV ecosystems through fiscal incentives, favorable investment policies, well-planned charging infrastructure, and collaboration with the private sector to build trust and generate valuable knowledge for future negotiations.
Vietnam’s abundant nickel reserves make it an ideal destination for battery production. Leading the charge is Vietnam’s prominent private conglomerate VinFast which is constructing a 14 hectare battery factory. Its annual capacity of 5 gigawatt-hours is equivalent to 30 million battery cells.
In 2023, ASEAN leaders issued a declaration aimed at cultivating a regional EV ecosystem, showcasing their political commitment to developing the region’s EV supply chain and positioning it as a global EV manufacturing hub. This initiative enhances the implementation of the ASEAN Economic Community, which is the region’s ambitious economic integration initiative.
But the most daunting hurdle lies in the establishment of regional standards for EVs, a pivotal strategic measure in the declaration. Establishing these standards likely involves developing an ASEAN-wide mutual recognition arrangement (MRA). The journey ahead is arduous. The ‘ASEAN Way’ of developing a MRA entails lengthy negotiations among ASEAN member states, as demonstrated by the 14-year marathon of the ASEAN Mutual Recognition Arrangement on Type Approval for Automotive Products. Such a protracted process risks undermining the foundation of the EV ecosystem that ASEAN seeks to cultivate.
Chinese companies, GSC Aion New Energy Automobile and Svolt Energy Technology, have already committed large investments to EV production and battery production in Thailand. The Thai government has been actively promoting investments in the EV industry, offering incentives and benefits to investors from around the world.
The arrival of Chinese manufacturers would help boost the popularity of EVs in Thailand, which is the second largest car market in ASEAN. In the first half of 2023, 31,000 EVs were registered in Thailand, triple the number registered in all of 2022.
Source : ASEAN’s EV ecosystem ambitions | East Asia Forum
About the author
East Asia Forum provides a platform for the best in East Asian analysis, research and policy comment on the Asia Pacific region and world affairs.
Thailand Business News covers the latest economic, market, investment, real-estate and financial news from Thailand and Asean. It also features topics such as tourism, stocks, banking, aviation, property, and more.
