Southeast Asia is also becoming an important EV manufacturing platform. Several ASEAN economies already have robust manufacturing bases for automobile production and are therefore ready to transform themselves into key production hubs for EVs. Thailand, known as the “Detroit of the East”, has the largest automobile production base in the region and the 11th largest worldwide. The Thai government has established a strong and resilient local supply chain in the automobile industry by creating a cluster of parts suppliers and luring all the major Japanese, European and American automakers to set up production and export bases in Thailand. Due in part to Thailand’s mature infrastructure, many Chinese EV manufacturers, such as BYD, Great Wall Motor (GWM) and Hozon, have already launched their production lines in the country. Vietnam's VinFast has announced ambitious expansion plans to target markets in the region.
Many Southeast Asian countries possess rich mineral reserves, which are essential for the production of EVs. Nickel, for example, is a key component of long-range EV batteries. As the world’s largest nickel producer with about 22 percent of the world’s known reserves, Indonesia – with its large domestic market – is well positioned to become a hub for EV manufacturing. To capitalize on the country’s abundant nickel reserves, China’s BYD and Tesla from the US are setting up production facilities in Indonesia.
ASEAN member states have taken numerous steps to facilitate investment and trade in EVs, thereby enhancing the region’s potential. For instance, Thailand has decided to exempt local production of battery-powered passenger cars, minibuses, and pickup trucks from all import tariffs until the end of May 2025. Malaysia has also offered similar tax incentives.
Why is Indonesia pushing for region-wide cooperation?
As chair of ASEAN in 2023, Indonesia has adopted the theme “ASEAN Matters: Epicentrum of Growth”, with three pillars: ASEAN Matters, Epicentrum of Growth, and the implementation of the ASEAN Outlook on the Indo-Pacific (AOIP). The Indonesian government has designated the development of a regional ecosystem for EVs as one of its top priorities for achieving the second pillar.
Why marshal regional cooperation on EVs?
First, Indonesia’s activism should be viewed in the context of the country’s ongoing efforts to combat climate change and accelerate energy transition at both the regional and global levels. In 2022, Indonesia not only upgraded its nationally determined contribution (NDC) target but also pushed the G20 to adopt the Bali Compact and subsequently the Bali Energy Transition Road Map. With these accomplishments, Indonesia has taken a leadership role in mitigating the impacts of climate change and promoting the global energy transition. Working on a regional agenda for EVs is part of Indonesia’s plan to carry over its G20 presidency priorities to its agenda as ASEAN chair. What is more, as the ASEAN member state with the biggest and most populous economy, with the highest energy consumption, Indonesia aspires to become a regional leader in this regard.