BEVs take off faster than expected in ASEAN countries

Following the implementation of favorable policies, ASEAN's BEV market has been accelerated by the entry of non-Japanese automakers

Note Tumrasvin, Senior Analyst, ASEAN

01 December 2022

Following the implementation of EV incentive schemes by policymakers, especially in the two largest markets of Thailand and Indonesia, battery electric vehicles (BEVs) have taken off faster than expected in ASEAN countries. The pace of BEV penetration appears to have accelerated and is being driven by non-Japanese manufacturers. At this early stage of transitioning to electric vehicles, there is plenty of room for new entrants to penetrate the ASEAN car markets, where Japanese car brands have long dominated. Japanese automakers continue to remain reluctant to invest in BEVs, creating openings for other players.

Since March 2017, Thailand’s Board of Investment (BOI) has been planning to develop the electric vehicle market and to draw in investments by issuing electric vehicle and hybrid incentive packages. The incentives have attracted most of the major players in the market. However, the automakers who participated in this scheme mainly focused on producing hybrids (HEVs) and plug-in hybrids (PHEVs).

To capture the current global BEV trend, the Thai government established a new phase for BEVs in late 2020 with greater benefits for BEV project investment. This policy has successfully brought new investments from Chinese players such as Great Wall Motor (GWM) and BYD. Moreover, in February this year, the new BEV stimulus package was announced and included import and excise duty cuts and a direct cash subsidy of 70k – 150k THB per unit, depending on the model of the vehicle. This latest incentive will focus on stirring consumer interest and boosting BEV sales during 2022 and 2023 while promoting domestic production of BEVs in 2024 and 2025. It should be noted that automakers joining the program must offset their imported BEV volumes with local BEV production at the ratio of 1:1 by 2024 and 1:1.5 by 2025.

For the first eight months of this year, sales of BEVs in Thailand surpassed 5,200 units, an increase from just 1,900 units sold in 2021. We project that full-year 2022 BEV sales in the Thai market will reach 13k units (accounting for 3.2% of total PV sales), thanks to the government’s incentive package which helps reduce the price of BEVs in the market. The Chinese brands are set to lead the BEV market in Thailand, accounting for around 87% of total BEV sales in the country this year. We expect that Chinese OEMs will spearhead BEV sales, accounting for more than 80% of the BEV segment share over at least the next five years before losing some of their share to European and Japanese automakers but remaining the segment leader. Nevertheless, we do not expect that the local production of BEVs will significantly accelerate until 2025 as the automakers have almost a two-year period in 2022-2023 to import BEVs before starting local production.

On the other hand, Indonesia has already begun local BEV production of the Hyundai Ioniq 5 (in March 2022) and the Wuling Air BEV (in August). We expect that the other two active Chinese OEMs, Chery and Dongfeng, will also build their BEVs domestically in Indonesia soon. Mitsubishi and Toyota are reported to be planning to produce BEVs in the country. However, that would not be expected to happen until 2025.

Unlike Thailand, Indonesia has not yet implemented any EV subsidies for consumers. However, it is considering introducing subsidies next year to stimulate the market.

When looking at recent sales in Indonesia, nearly 1,600 BEVs had been sold between January and August 2022. In full-year 2022, around 9,000 units of BEVs are expected to be sold, a huge increase from just 667 units in 2021.

Together with a series of favourable incentives, demand for BEVs in ASEAN has started to gain momentum, largely because of the more affordable and greater choice of BEVs offered by Chinese and Korean makers and the concern about rising gasoline prices.

However, the challenges to penetrating the ASEAN market at a meaningful rate are significant, given the lack of EV charging infrastructure which is key to encouraging buyers to choose BEV over gasoline vehicles. Support for the EV infrastructure from the governments is crucial to create a suitable BEV ecosystem and hence sustainable growth of BEV sales.