- Electric vehicle and battery companies from China are rapidly opening factories in Southeast Asia, primarily in the region’s four largest automotive consumer markets: Indonesia, Thailand, Malaysia, and Vietnam.
- According to the ASEAN Automotive Federation, Thailand and Indonesia lead in motor vehicle production by units with more than 1 million produced in 2022. The two countries also enjoy the largest number of Chinese NEV industry players presence.
- Chinese companies typically choose Thailand as their first stop for ASEAN expansion. With strong market demand and penetration rates, many are also setting up local factories in other ASEAN countries.
- For Chinese electric vehicle players, Southeast Asia offers unique opportunities for vertical integration. EV battery leader CATL is planning vertically integrated manufacturing in Indonesia from mineral extraction to battery manufacturing.
- The fast expansion of Chinese players in the region has increased both opportunities and risks for European automotive players. On the one hand, the Chinese presence is boosting the local supply chain ecosystem and overall consumer recognition of electric vehicles. For automotive suppliers, Chinese EV makers have also expanded their customer base and revenues.
- On the other hand, risks of competition, price wars, and loss of market share are also increasing. With more localized production, Chinese players will bring their domestic suppliers abroad, leading to competition and price pressure for both vehicle producers and part suppliers.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.