Southeast Asia is emerging as a new production hub for the electric vehicle (EV) and battery industry, with Chinese companies leading the expansion of local production capabilities. As the region is expected to grow into an export base targeting Europe and Australia, South Korean automakers and battery manufacturers may need to adjust their local production and supply chain strategies.
According to a report by the International Energy Agency (IEA) on Southeast Asia's energy technology supply chain, the market for clean energy technology in the region is projected to grow from approximately $25 billion in 2025 to over $80 billion by 2035, more than tripling in size. The expansion is expected to be driven primarily by the electric vehicle and battery sectors.
Demand for electric vehicles is also rising rapidly. As of the end of the third quarter of this year, more than one in four new cars sold in Southeast Asia was an electric vehicle. This surge is attributed to government support for the development of the EV and battery industries, along with increased investments from foreign companies. Production capacity is also expected to grow sharply, with Southeast Asia's EV production capacity projected to rise from about 1 million units in 2025 to 1.8 million units by 2030.
However, the rapid market penetration by Chinese companies poses a challenge for South Korean firms. Chinese automakers accounted for approximately 50% of Southeast Asia's EV production capacity last year. By 2030, their share of planned additional production capacity is expected to exceed 70%.
The situation is similar in the battery sector. Southeast Asia's battery cell production capacity is expected to expand from about 40 GWh in 2025 to over 100 GWh by 2030. Currently, Chinese companies hold just over half of the production capacity, and if all announced expansion plans are realized, this share could rise to around 75% by 2030.
Chinese automakers are also increasing their local sales. According to the Indonesian Automotive Industry Association (GAIKINDO), BYD, a Chinese company, recorded local wholesale sales of 43,727 units from January to September this year, ranking fifth among all brands. BYD operates a factory in Subang, West Java, with an annual production capacity of 150,000 units.
The IEA notes that the production costs for electric vehicles in Southeast Asia are currently 4% to 6% higher than in China. As Chinese companies expand local production, they may enhance both price competitiveness and supply chain efficiency.
There is also potential for Southeast Asia to evolve from a mere consumer market into a global export hub. The IEA forecasts that by 2035, the region's EV production could exceed 3.6 million units, transitioning it into a net exporter. Key export markets are expected to include Europe, Australia, and New Zealand. If Chinese companies leverage their Southeast Asian production bases to target third-country markets, competition with South Korean automakers and battery manufacturers is likely to intensify.
* This article has been translated by AI.
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