Southeast Asia: Chinese EVs Fight Local Competition, High Prices
Chinese electric vehicle (EV) manufacturers are facing a sobering reality check in their quest to conquer the Southeast Asian market. While the region, with its burgeoning middle class and growing demand for sustainable transportation, initially appeared promising, early successes are yielding to complex challenges.
The stark contrast between the bustling VinFast showroom in Hanoi and the sparsely populated BYD dealership a few kilometers away vividly illustrates the current landscape. VinFast, a Vietnamese automaker, is enjoying robust sales, with potential buyers flocking to examine its latest models. This highlights a key challenge for Chinese manufacturers: strong local competition. In Vietnam, VinFast’s extensive network of proprietary charging stations and affordable entry-level EVs provide a significant advantage. This resonates with buyers like Hanoi resident Thinh Hanh, who appreciates the personalization offered by his VinFast VF 9 and expresses concerns about the lack of charging infrastructure for Chinese EVs, coupled with lingering anxieties about purchasing Chinese products due to historical tensions.
While Southeast Asia’s burgeoning middle class aspires to own EVs, the price remains a significant barrier for many. The reliability of electricity supply and the sparse EV charging infrastructure across many countries present further obstacles. As Ron Zheng, a partner at global consultancy Roland Berger GmbH, explains, Southeast Asia, with its diverse cultures, languages, and regulatory systems, presents a far more complex market than China. He draws a parallel to China’s own EV adoption journey, noting that it took approximately five years of government incentives before consumers readily embraced the technology, suggesting a similar timeline for Southeast Asia.
The region’s automotive landscape is also dominated by established players. Japanese automakers like Toyota, Nissan, and Honda still hold a substantial market share, accounting for roughly 68% of passenger car sales in 2023. While Roland Berger forecasts Chinese carmakers' share to rise to around 13% by 2030, from 6% in 2023, a country-by-country analysis reveals the arduous path ahead.
Indonesia, for instance, saw only 43,188 EV sales in 2024, a small fraction of the total 860,000 passenger cars sold. This casts doubt on the government’s ambitious target of 2 million EVs by 2030. The sentiment expressed by Jakarta school teacher Hairayani underscores this challenge: awareness of EVs remains low among average consumers, who are deterred by both price and the perceived inconvenience of charging. Thailand, despite government subsidies, experienced a 9.3% drop in EV sales in 2024, falling short of its target. High levels of household debt and tighter loan approvals further exacerbate the situation.
Despite these headwinds, Chinese EV manufacturers are not retreating. They are investing heavily in marketing and production. GAC Aion has launched prominent advertising campaigns, while BYD has opened a massive showroom in Jakarta. Significant investments in production facilities are also underway, including BYD’s $1.3 billion plant in Java, Indonesia, and Chery Automobile’s planned EV factory in Rayong province, Thailand. These initiatives reflect the long-term vision of Chinese companies, betting on the eventual growth of the EV market in Southeast Asia.
While Zheng anticipates “short-term turbulence,” he acknowledges the significant operational challenges, including logistics and mass production, that lie ahead. The success of Chinese EV makers hinges on navigating these complexities, adapting to local market dynamics, and overcoming consumer skepticism. Whether they can successfully replicate their domestic dominance in this diverse and competitive region remains to be seen.
