Southeast Asia’s emerging EV ecosystem

Digital panel discussion with Ferry Akbar Pasaribu, Assistant Deputy for Investment Strategy, Coordinating Ministry for Maritime and Investment Affairs, Indonesia; Laurent Genet, General Director, Audi Vietnam and Asia Country Director, CFAO Automotive; Michael Taylor, Climate Correspondent, Southeast Asia, Thomson Reuters Foundation; hosted by Dr Ong Kian Ming, Senior Adviser at Global Counsel, discussing Southeast Asia’s emerging EV ecosystem.

Here are some of the key takeaways from the discussion: 

• Electric vehicle markets in Southeast Asia are diverse, with different actors driving the EV revolution in different countries. In Indonesia, policymakers are pushing hard with EV industrial policy, whereas in Vietnam the private sector is leading the way. Private EV manufacturers in Vietnam have invested heavily in EVs over the last few years due to the sheer market potential, noted Laurent Genet: “There is basically no incentive, no subsidy, and no charging station support (for EV two-wheelers), but electric motorbike manufacturers are trying to seize the market by leapfrogging to the new technology.” He also noted that electric motorbikes manufactured by local companies represent 80% of the market share of electric two-wheelers sold in Vietnam in 2020.
• Southeast Asian governments increasingly recognise that supporting the electrification of domestic transport dovetails with economic objectives, and are setting higher EV ambitions as demonstrated through various EV-related industrial policies. Laurent Genet said, “Thailand has an objective to stop new ICE car sales by 2035, so now they are incentivising companies to switch from ICE to EV. The country has a huge export market network (that it can tap into), including suppliers and sub-suppliers for its automotive sector.” Ferry Akbar Pasaribu also discussed how Indonesia is leveraging its abundant supply of nickel to onshore an EV battery supply chain. “Nickel is one of the largest reserves that you could find in Indonesia. Now we want to switch to EVs. Changing to greener energy is our core interest.”
• China is the clear leader in the global EV supply chain, and Southeast Asian countries are exploring how they might be able to benefit from partnerships with China. In terms of critical mineral supplies, Laurent Genet noted that although China has secured 90% of the raw materials for both EV and battery production from both domestic and overseas reserves, it is conscious of future supply issues and is actively working with Southeast Asian partners to secure more critical materials. Michael Taylor added: “Malaysia’s largest carmaker is looking at a potential partnership with a Chinese EV manufacturer in order to benefit from the expertise. But Japanese cars are still favourite models in the region for most Southeast Asian drivers, so we will see how the Chinese EV makers will battle them out by striking partnerships with domestic players.”
• The US Inflation Reduction Act (IRA) is seen as a setback by countries like Indonesia, and the government is actively studying how it should respond. The Inflation Reduction Act issued by the US is somewhat counter-productive for the US, according to Ferry Akbar Pasaribu: “There is a joint venture between a Chinese company and a US company operating in Indonesia’s EV ecosystem. They will not be able to send their products, like batteries, to the US because of their affiliation with the Chinese company.” But a limited free trade agreement (FTA) with the US could be a solution for Indonesia to get market access in the US. “In order to secure better access to the US market, we are discussing a limited FTA with the US,” said Ferry Akbar Pasaribu. Michael Taylor noted that Indonesia has been able to do a good job so far in balancing its interests amid rising tensions between China and the US, and this will play an important role in its EV industry.
• The waste from nickel mining and the devastating impact it has on ecosystems remains an outstanding policy issue. “The mining for nickel must be as green as possible, which people may scoff at. You must do this through regulation against labour and land rights abuses,” said Michael Taylor on how tighter sustainability standards are needed if the sector is to truly deliver a green alternative to conventional transport. “How mining waste is managed is also important, and punishing any miners that breach rules and regulations quickly and efficiently.” Ferry Akbar Pasaribu added that the Indonesian government has also taken steps to strengthen oversight: “Environmental is one of the three pillars that companies need to fulfil before they can secure licensing in nickel mining. The license for mining is now held directly by the central government to prevent what happened in Bangka Belitung due to irresponsible mining license issuance by the local government.”
• Developing charging stations in Southeast Asian countries is key to accelerating EV deployment but requires support from the government in the form of incentives and standardisation. Laurent Genet said: “The charging is going to happen, it needs some support, it needs some policy, it needs some fairness in the way it is implemented.” He noted that the existing charging stations in Vietnam are not public charging stations that can be used by all EV products in the country. Indonesia has been ramping up the number of charging stations in the country, but the uneven distribution of charging stations remains a challenge. Most of the 616 charging stations available across the archipelago are installed on Java Island where the population is concentrated. Ferry Akbar Pasaribu acknowledged: “The government has assigned state-owned enterprises to expand the charging stations throughout Indonesia. As of now, the coverage of charging stations is limited. You must plan your travel quite carefully.”
• Political will is critical to strengthening the EV sector in Southeast Asia, and policymakers must also be prepared to bridge institutional support for EVs across ministries and arms of government. “People want to buy EVs, but they are unable to charge them at their homes because apartment blocks make it impossible,” said Michael Taylor. There should be special treatment for EV users in terms of parking lots and access to specific areas at certain times, Laurent Genet suggested. Ferry Akbar Pasaribu opined that the EV sector in Southeast Asia will only develop if there is strong political will among policymakers, who can push the agenda based on what they have agreed at the recent ASEAN Summit in Labuan Bajo.

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